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Income Support and Social Services for Low-Income People in Michigan

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Document date: July 01, 1998
Released online: July 01, 1998

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Note: Those wishing to print this report should consider using the PDF Version.


About the Series

A ssessing the New Federalism is a multi-year Urban Institute project designed to analyze the devolution of responsibility from the federal government to the states for health care, income security, employment and training programs, and social services. Researchers monitor program changes and fiscal developments, along with changes in family well-being. The project aims to provide timely nonpartisan information to inform public debate and to help state and local decisionmakers carry out their new responsibilities more effectively. Key components of the project include a household survey, studies of policies in 13 states, and a database with information on all states and the District of Columbia, available at the Urban Institute’s Web site. This paper is one in a series of reports on the case studies conducted in the 13 states, home to half of the nation’s population. The 13 states are Alabama, California, Colorado, Florida, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New York, Texas, Washington, and Wisconsin. Two case studies were conducted in each state, one focusing on income support and social services, including employment and training programs, and the other on health programs. These 26 reports describe the policies and programs in place in the base year of this project, 1996. A second set of case studies to be prepared in 1999 will describe how states reshape programs and policies in response to increased freedom to design social welfare and health programs to fit the needs of their low-income populations.

The income support and social services studies look at three broad areas. Basic income support for low-income families, which includes cash and near-cash programs such as Aid to Families with Dependent Children and Food Stamps, is one. The second area includes programs designed to lessen the dependence of families on government-funded income support, such as education and training programs, child care, and child support enforcement. Finally, describe what might be called the last-resort safety net, which includes child welfare, homeless programs, and other emergency services. The health reports describe the entire context of health care provision for the low-income population. They cover Medicaid and similar programs, state policies regarding insurance, and the role of public hospitals and public health programs.

In a study of the effects of shifting responsibilities from the federal to state governments, one must start with an understanding of where states stand. States have made highly varied decisions about how to structure their programs. In addition, each state is working within its own context of private-sector choices and political attitudes toward the role of government. Future components of Assessing the New Federalism will include studies of the variation in policy choices made by different states.


Contents

Highlights of the Report

Introduction

An Overview of the State’s Social, Economic, and Political Environment

    The Population
    The Economic Environment
    The Political Landscape
    The Budgetary Landscape
Setting the Social Policy Context
    Organization of Services and Administrative Structure
    Social Welfare Spending and Coverage

Basic Income Support Programs

    An Overview of Michigan’s Income Support Programs
    The Family Independence Program: Benefit Levels and Caseload Trends
    The Family Independence Program: Requirements and Expectations
    Work First
    Project Zero
    Additional Policy Changes

Programs Focused on Achieving Financial Independence

    Employment and Training Services
    Child Care
    Child Support
    Medicaid and Other Health Programs

The Last-Resort Safety Net Programs

    Child Welfare Services
    Emergency Services and Housing
Service Delivery Innovations and Challenges
    Government Reorganization and the Coordination of Program Services
    Government Downsizing
    Involvement of Communities
    The Family Independence Specialist

Implications of the New Federal Welfare Reform Legislation

    Temporary Assistance for Needy Families
    Child Support
    Immigrant Provisions
    Food Stamp Employment and Training
    The Windfall

Conclusion

Notes

Appendix: List of Interview Sources

List of Tables

About the Authors


Highlights of the Report

This report focuses on the baseline conditions of cash assistance and social services in Michigan, as the state embarks on the new welfare reforms specified in the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA)—in particular, the replacement of Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF).

Michigan’s per capita income level and poverty rate are similar to the nation’s, although its unemployment rate is slightly lower. In addition, the percentage of babies born to unmarried women in Michigan—especially the rate of children born to unmarried women under age 20—is higher than the percentage for the nation. Although the median income of families with children is higher than the nation’s, on a composite of 10 selected measures of child well-being, Michigan ranks behind 26 other states. The state has historically been strongly Democratic, but it has had a very popular Republican governor since 1990 and a Republican-controlled Senate since 1994, and had a Republican-controlled House between 1994 and 1996. The state maintains control of the overall design and focus of nearly all programs for low-income families, but some child welfare services and virtually all employment and training program services are delivered by nongovernmental organizations at the local level.

Setting the Policy Context

In recent years, Michigan has emerged as a leader in states’ efforts to gain more autonomy over the design and implementation of federally funded programs for low-income families. As early as 1992, the state began to implement changes that emphasized the personal responsibility of all citizens to contribute productively to their families and communities across a broad spectrum of assistance programs. This initiative, To Strengthen Michigan Families , continues to provide the state’s framework for reforming programs serving low-income families in response to the latest wave of federal welfare reform.

The executive branch, in the persons of the governor and several cabinet members, has been the major player in shaping social policy reforms in Michigan, primarily because of a very general public assistance statute that has enabled the governor to seek federal waivers without specific state legislation. The state legislature further increased the governor’s role in 1995 by giving the executive branch broad powers over how the anticipated TANF block grant would be implemented. The legislation passed both houses with minimal debate, enabling the state government to implement the major provisions of PRWORA quickly. The role of advocacy groups and community service providers in that process is less clear. State officials believe these players were given substantial opportunity to provide input, but many nonprofit leaders believe they had little role, partly because they were not organized to have one, partly because they do not see it as their primary function, and partly because of the speed of the whole process.

Michigan’s healthy economy and its policy priorities are reflected in its budget. In fiscal year (FY) 1996, for the fourth consecutive year, the state ran a surplus in the unreserved part of the general fund, and the balance in the Rainy Day Fund (meant to stabilize the state budget in economic downturns) was at an all-time high. This is a major turnabout from the early 1990s, attributed to (1) the healthy economy, (2) a general reduction in state spending, (3) a reduction in the number of permanent state employees, (4) maximization of federal financial participation, particularly in Medicaid, and (5) a reduction in Medicaid’s growth rate from 14 percent early in the decade to a projected 4 percent in FY 1998—substantially lower than the state’s previous Medicaid experience. Spending on K–12 and higher education accounted for 36 percent of the total state budget in FY 1996, and spending on health, welfare, and social services accounted for an additional 30 percent. State funds account for about 25 percent of these expenditures. Michigan has a more generous AFDC/TANF program than many states; families received an average monthly benefit in 1995 of $414, compared with $381 for the nation as a whole.

Programs for low-income families are provided primarily by two cabinet-level agencies: the Family Independence Agency (FIA) and the Michigan Jobs Commission (MJC). FIA administers all income support and social service programs (including child care, child welfare, and emergency services) and also determines eligibility for Medicaid. A three-member County Social Service Board, one of whom is appointed by the governor and the other two by the county commissioner, serves as the major link (mainly advisory) between FIA’s county offices and the county administrative structure. MJC administers all employment and training programs, including those targeted to cash assistance recipients. Local Workforce Development Boards are Michigan’s local decisionmaking bodies for employment and training. Each board is staffed by a local Michigan Works! Agency, and all decisions about service providers and delivery are made by the local boards.

Basic Income Support

Since Michigan terminated its General Assistance program in October 1991, its major income support program (except for the federal Food Stamp program) is AFDC/TANF, which is called the Family Independence Program (FIP) in Michigan. Much smaller income support programs that are totally state-financed are State Family Assistance (SFA, now called State FIP) for low-income families not eligible for FIP and State Disability Assistance (SDA) for disabled persons who are not eligible for Supplemental Security Income (SSI). Michigan also provides a modest state supplement to federal SSI.

Family Independence Program

The redesign of Michigan’s welfare system began in 1991, with the elimination of the state’s General Assistance program. In 1992, and again in 1994, the state received federal approval to implement a series of AFDC waivers. In December 1995, nine months before federal welfare reform became law, the state passed a welfare reform bill that mirrored many of the eventual federal provisions. As a consequence, Michigan was the second state to submit its TANF plan for federal approval and began operating its new income support program in October 1996. In fact, little change was needed. Since 1992, Michigan has required welfare recipients to engage in activities for a minimum of 20 hours per week that would lead to their personal growth or the community’s enhancement. Since 1994, two state initiatives have focused more directly on fostering recipients’ transition to unsubsidized employment.

Work First

This is a statewide mandatory job readiness/job search program for AFDC/FIP recipients, implemented in late 1994 and operated jointly by FIA and MJC. All able-bodied recipients are required to participate unless they are employed more than 20 hours a week or are caring for a severely disabled child.

Key features of Work First are mandatory orientation before application approval, continuous participation until unsubsidized employment is found, and stringent sanctions for noncompliance.

Project Zero

Implemented in mid-1996, this is a demonstration under which study sites are given increased resources for child care and transportation with the goal of zero unemployment among FIP recipients. Originally slated for one year and six sites, it has been continued and expanded to six more sites. Of the six original sites, only one has attained zero unemployment, but the others have higher rates of employment among FIP recipients than the rest of the state. Along with these major initiatives, numerous minor program changes have been made, all designed to create an income support system in which work is the goal. State and local officials agree that much still needs to be done to transform the current system from a welfare system to a work system, but this is primarily an implementation task rather than a program design task.

Programs That Promote Financial Independence

To help promote self-sufficiency, cash assistance often needs to be supplemented with employment and training, subsidized child care, child support collection, and health insurance coverage.

Employment and Training Services

A central mission of the MJC is to ensure that workforce development services are available to those who need them and that they are easily accessible, preferably through a seamless service delivery system. To achieve this goal, the governor’s No Wrong Door system was implemented in every local community as of July 1, 1997. Through this system, customers must have access to the Job Training Partnership Act (JTPA), School-to-Work, Employment Services, Unemployment Insurance, and Work First. Localities have flexibility to use electronic links, hub and cluster models, One-Stop Shops, or a combination of models. Any employer or any job seeker may access the No Wrong Door system and receive a basic set of free services. In practice, however, since Work First accounts for the largest share of resources devoted specifically to employment and training programs at both state and local levels, direction of employment and training policy for low-income residents tends to be driven by the Work First focus.

Child Care

Since the early 1990s, child care has been viewed in Michigan as integral to helping welfare recipients find and keep jobs. Currently, child care assistance is available to all welfare recipients who are looking for work and all working women whose incomes fall below 85 percent of the state median income. FIA manages all child care funding and administers the Child Care Services program. As of November 1996, this became a fully unified system across eligibility categories, reimbursement rates, policies, and regulations. The only significant difference is in the financial responsibility of the families: Welfare families receive free care and income-eligible families pay according to a sliding scale. There is no waiting list for subsidized care, but the state has set up priorities in case demand increases to the point where child care can no longer be offered as an entitlement. Public assistance recipients working or participating in education and training have top priority in this schema.

The two statewide child development programs, Head Start and the Michigan School Readiness Program, are separate from the Child Care Services program. Head Start receives no state supplement but does get a portion of Child Care Development Block Grant (CCDBG) funding. The Michigan School Readiness Program, administered by the state Department of Education (DOE), is entirely state-funded and restricted primarily to four-year-olds. The growing need for child care has sparked increased coordination and collaboration among the child care and child development communities within DOE, FIA, and Head Start, although coordination is difficult because of incompatible eligibility definitions across programs.

Child Support

Child support staff members housed in the local FIA offices are the first point of contact for families applying for FIP, Title XIX, and Food Stamp benefits who need to have a child support order established. But 64 Friend of the Court (FOC) offices across the state, established by law in 1917, and all the county prosecuting attorneys are also involved in the child support process. This complex set of actors makes change difficult, because very specific state law typically requires consensus among all those involved for any change. Even so, some new provisions have been implemented, including allowing child support orders to be reported to credit bureaus, requiring hospitals to establish paternity at the time of birth, and authorizing the state Treasury to collect arrearages owed to the state for former FIP recipients. Attempts to withhold vehicle registration and to require employers to withhold new employees’ child support obligations, among other innovative proposals, have failed. Michigan has a high rate of paternity establishment now that it has a hospital-based system. Its child support collections have also increased substantially over the past 10 years, although most of this increase has been for non-FIP families. Funding for child support enforcement is an ongoing problem, and declines in the FIP caseload are thought to worsen the situation by reducing the federal incentive amounts paid for child support collected on behalf of welfare recipients. Passage of the new federal mandates to implement more centralized and streamlined processes and data systems presents Michigan with a number of difficult issues, because the local structure of the child support system and the continuing judicial nature of the process through the FOC participation militate against both centralization and administrative efficiency.

Medicaid and Other Health Coverage

Medicaid is the primary health program available to families not covered by private health insurance. Michigan is in the process of shifting nearly all Medicaid users to managed care, and coverage is available to all children ages 16 and under from families with incomes below 150 percent of the federal poverty level. In addition, the state has a Blue Cross/Blue Shield Caring Program for Children that provides limited health benefits to 4,500 low-income children and a state-funded State Medicaid Assistance program that provides health benefits to recipients of the small state-funded SDA and SFA programs.

Last-Resort Safety Net Programs

Although one of the goals of devolution is to promote the well-being of children and families, it is important to consider what might happen to families for whom the new rules and programs do not work as designed. Child welfare and housing emergency services have existed for a long time to "pick up the pieces" when families cannot cope. Michigan has reduced expenditures for emergency assistance in recent years, but expenditures for child welfare have increased.

Child Welfare

Child welfare services are administered by the Office of Children’s Services in the FIA, with little interaction between staff working with cash assistance and staff working with child welfare services. Although the majority of children in Michigan’s child welfare caseload are in out-of-home placements, Michigan has lower substantiation and out-of-home placements than most states, because it operates one of the most extensive family preservation programs in the country. About 100 prevention workers throughout the state provide supportive services to families to avert the need to involve families formally in the Child Protective Service (CPS) system. Even when abuse or neglect has been substantiated, CPS may refer the case to its family preservation program, Families First, rather than remove a child from the home. More than half the costs of child welfare programs in the state are funded with federal dollars, including Social Services Block Grant (SSBG) and Titles IV-A, IV-B, and IV-E of the Social Security Act. Counties pay a small share of child welfare expenditures, including half the costs of child welfare clients who are not eligible for Title IVE. Since one of the objectives of the state’s child welfare program is to be "part of the community fabric," most federal funds the state receives to support families at risk of child abuse and neglect are passed through to county Multi-Purpose Human Service Collaboratives, which purchase community-based services. FIA also contracts out certain child welfare responsibilities to community agencies, a privatization initiative that current and previous administrations have encouraged.

The greatest challenge is growing staff shortages, because referrals have increased and staffing has not. In 1995, responding to growing policy concerns that the state was placing too much emphasis on family preservation and not enough on prompt removal and termination of parental rights in cases of substantiated abuse and neglect charges, the governor issued an executive order to create the Children’s Commission to review laws, programs, and procedures in child welfare. The commission released recommendations in 1996, and the state has allocated money in its FY 1998 budget to begin implementing some of them.

Emergency Services and Housing

Michigan currently operates a number of programs to address the needs of families experiencing emergencies, but funding is substantially reduced from the levels in the early 1990s. In 1991, the state block-granted emergency assistance to the counties and created a new State Emergency Relief (SER) program with stricter eligibility rules, service caps, and other restrictions to distinguish between "deserving" and "undeserving" individuals and families. Emergency funds may not be used, for example, if a situation is likely to recur or was "client caused." This change was accompanied by a 69 percent reduction in emergency assistance expenditures by the state and a 69 percent cut in the total number of persons so funded. SER is almost completely state-funded, with Title IV-A emergency assistance going primarily to Families First, not SER. The SER program will assist only individuals and families who have some form of income (including public assistance) but less than $50 in available cash. Throughout the state, the biggest challenge faced by emergency shelter providers is their limited ability to move people into nonemergency housing, since public or other subsidized housing is not a resource for the state’s homeless families. Detroit is an exception, because when the state followed the federal government in lifting the requirement giving homeless people priority status in receiving housing or Section 8 certificates, the city already had extremely long waiting lists, which are still being processed.

Implications of the New Federal Welfare Reform Legislation

Since the state already had a plan in place to take advantage of the new flexibility provided by federal welfare reform, state officials believe the new federal law will have only minor impacts on how the state runs its cash assistance system. The one significant difference is that Michigan has never implemented a time limit on benefits and does not plan to change its policy. Given the state’s emphasis on work and full family sanctions, some officials do not expect many families to exceed the five-year federal limit. But no program has been created to provide assistance to those who reach the limit and are in program compliance, and providers are already seeing a crumbling safety net. State officials are concerned that they will not be able to meet the two-parent work participation targets, and the governor has authorized an extra $13 million for Michigan Works! Agencies to develop and pay for on-the-job-training placements for these families.

Michigan has a very small immigrant population and does not expect much impact from the new federal restrictions on immigrant benefits. In any case, the state has opted to provide TANF to qualified legal aliens who were in the United States before August 22, 1996, but not for those who entered the country after that date.

Michigan’s main program concern is the food stamp changes required by PRWORA. Childless food stamp recipients are now required to work after receiving food stamps for three months. Although Michigan has invested substantial resources in employment and training for AFDC/FIP recipients, it has operated only a very small employment and training program for food stamp recipients and does not have the infrastructure or funds in place to provide the services now required. Michigan did not apply for exemption from these requirements, permitted in areas of high unemployment, because the governor felt it was unfair to ask single mothers with children to work and not expect the same from able-bodied childless adults. There was also a concern that it would be inconsistent to sell Michigan as a good place to locate a business while at the same time claiming an excess supply of unskilled workers.


Introduction

In recent years, Michigan has emerged as a leader in states’ efforts to gain more autonomy over the design and implementation of federally funded programs for low-income families. In 1992, through a statewide initiative known as To Strengthen Michigan Families , Michigan began to implement changes across a broad spectrum of programs, emphasizing that all citizens have a personal responsibility to contribute productively to their families and communities. The initiative represented Governor John Engler’s vision for ensuring the well-being of Michigan’s children and families. More than five years later, it continues to provide the framework for reforming services for low-income families in Michigan.

This report attempts to capture the processes and philosophies that have shaped the design and implementation of Michigan’s response to the needs of low-income families and to consider the direction in which the state plans to move in coming years, particularly in response to changes at the federal level. More specifically, the report focuses on the findings of the authors’ case study of Michigan, which was designed to provide a broad picture of the state’s social safety net for low-income families with children. This case study examined the current goals, policies, practices, organizational structure, and funding of a wide variety of programs serving children and their families, as well as recent changes in those programs. The review covered income support, employment and training, and child care programs targeted to low-income families. It also examined how other programs, such as child welfare and emergency services, work to assist low-income families in crisis.

Researchers from the Urban Institute, the University of Michigan, and Child Trends visited Michigan in January 1997. At that time, the governor was preparing to submit his fiscal year (FY) 1998 budget request to the legislature. To reduce the size of government, he had announced an early retirement package for state government workers, which many officials expected would have far-reaching consequences for the delivery of services for low-income families. The state had already finalized many of its plans for implementing the federal Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996. Most of the state’s plans built on reforms already in place or planned before the passage of the federal legislation.

To develop a picture of programs and issues at the state level, the research team conducted interviews with representatives from the government, the legislature, and the advocacy community. At the local level, we interviewed representatives from the local government and the nonprofit community in the city of Detroit, the largest urban area in the state.

This report begins with a discussion of the state’s characteristics, including its population, economic condition, and political environment. It then provides an overview of the state’s agenda for serving the needs of low-income families, including spending in this area and a description of the service delivery structure. The next three sections describe three broad social program areas—income support for low-income families, policies for moving families toward financial independence, and programs that provide a safety net for families in crisis. The following section describes the particular service delivery challenges that Michigan faces in providing support to low-income families. The report ends with a discussion of the direction in which the state plans to move in the coming years, focusing primarily on its response to PRWORA.


An Overview of the State’s Social, Economic, and Political Environment

The Population

In 1995, Michigan had a population of 9.6 million, which had been relatively stable since 1990, growing at half the rate of the U.S. population (table 1 ). Compared with the nation as a whole, Michigan has a somewhat higher proportion of African Americans but a much lower concentration of other minorities (for example, Asians and Hispanics). The majority of the state’s population resides in the seven-county (Wayne, Oakland, Macomb, Washtenaw, St. Clair, Monroe, and Livingston) area of southeast Michigan. The rest of the state has several urban centers, as well as large rural areas in the northern portion of the Lower Peninsula and most of the Upper Peninsula.

With just over one-quarter of the population in the state under the age of 18, the age composition of Michigan’s population mirrors that of the United States as a whole. However, there are important differences in the social composition of the state’s population. Just over 15 percent of Michigan’s families are headed by a single parent, compared with 13.8 percent in the nation overall. Michigan also registers a higher percentage of births to unmarried women in general and to unmarried women under the age of 20 in particular. In 1994, 87 percent of births to women under age 20 in Michigan were nonmarital, compared with 76 percent for the United States.

Michigan places around or below the median state on the most common indicators of child well-being. In 1995, the percentage of babies born with low birth weight (7.7 percent) was higher than in 34 other states, and the state’s infant mortality rate at 8.3 per 1,000 live births was higher than in 35 other states. Although high in comparison to other states, it is important to note that Michigan’s infant mortality rate has declined steadily for the last seven years. The state fared somewhat better on measures related to the well-being of teens. Only 8 percent of teens between the ages of 16 and 19 were neither working nor attending school, a figure lower than those of 33 other states. Similarly, Michigan’s teen birthrate (30 births per 1,000 females between the ages of 15 and 17) was lower or equal to rates in 29 other states. Approximately 20 percent of all children in the state lived in poverty, placing the state close to the national average but higher than 31 other states. Overall, Michigan ranks 27th in a ranking of states on a composite of 10 selected measures of child well-being.1

The Economic Environment

Over the last decade, Michigan’s economy has improved dramatically. Because of the primacy of the auto industry in the 1980s, the state’s economy was hit hard by declines in sales of U.S. vehicles. Unemployment rates climbed, reaching 9.2 percent in 1991. Since that time, the state has diversified its economy, moving away from manufacturing and emphasizing the service sector (although Michigan continues to have a larger share of jobs in manufacturing, compared with the entire U.S. economy). For the last four years, the state’s unemployment rate has dropped steadily. In 1997 the annual unemployment rate was just 4.1 percent, the lowest on record.

Per capita income ($23,915) in Michigan is higher than the national average ($23,208) and has grown more over the past five years than the national average (27.8 percent versus 21.2 percent). The median income for families with children in Michigan ($40,315) is also higher than the median income for families in the country as a whole ($37,109).

The Political Landscape

Michigan historically has had a strong tradition of support for the Democratic party, and Detroit was for decades the state’s center of political power. Both situations changed significantly in the past several years. Republican John Engler, the former majority leader in the state Senate, was elected governor in 1990, and his popularity grew as he championed tax cuts and devolution of power to local communities. He was elected to a second term in 1994 by a substantial majority. Republicans also gained shared control of the House in 1994 and became the majority party when a Republican won the election for a vacant seat. Democrats regained control of the House in the 1996 elections, but Republicans retained control over the Senate.

Governor Engler’s priorities and interests have focused on education, welfare, job growth, tax cuts, and corrections. He has been one of the nation’s leading governors on national welfare reform, pushing for changes in federal law, and he has made implementing welfare reform a priority in Michigan. He also has been a champion of charter schools and has led Michigan’s efforts to equalize funding for local school districts.

Governor Engler and several of his cabinet members have played a major role in shaping social policy reforms, with the state legislature playing a minor role. For example, Michigan made most of the changes to its welfare system by applying to the U.S. Department of Health and Human Services for waivers from federal law. Because Michigan has a very general public assistance statute, the governor was able to seek waivers without state legislation. Moreover, the state legislature has given the governor further authority to shape social welfare policy. In anticipation that federal legislation would be enacted providing the state with a block grant for the Aid to Families with Dependent Children (AFDC) program, the state legislature passed legislation in November 1995 giving the executive branch broad decisionmaking authority over implementation of the block grant. This legislation passed both houses with minimal debate, so the state was able to move quickly to implement the major provisions of PRWORA.

Although the role of top cabinet-level administrative officials in the decision-making process in Michigan is quite clear, less consensus exists as to the influence of advocacy groups and community service providers in that process. At the state level, officials believe ample input was sought from advocates and local providers. However, many nonprofit leaders believe that their organizations have not played a significant role in policy development—because they are not organized to do so, because they do not see it as one of their primary functions, and because some policy changes were enacted within very short time frames that did not allow these organizations enough time to provide input. Because incumbent legislators face term limits, advocates now foresee an additional problem in affecting policy at the state level. Legislators may leave office before an issue is resolved, requiring groups to reestablish relationships and reeducate new members.

The Budgetary Landscape

Michigan’s healthy economy and its policy priorities are both reflected in its budget. In 1997, for the fourth consecutive year, the state ran a surplus in the unreserved portion of its general fund, and the balance in the Rainy Day Fund (reserves meant to help stabilize the budget during economic downturns) is at an all-time high of more than $1.1 billion.2 This fiscal picture is drastically different from that of the early 1990s.

When Governor Engler took office in 1991, the state was facing a budget shortfall of more than $1 billion. The legislature had already authorized cuts in excess of $500 million, a significant portion of which were to come out of the budget of the then-Department of Social Services (which was renamed the Family Independence Agency in April 1996). Through an executive order, Governor Engler proposed more cuts, including further spending cuts in social service programs. After months of debate, the governor’s first budget was adopted. Over the next few months, some social service programs saw funding restored. However, decisions to eliminate the state’s General Assistance program (which provided state-funded cash assistance for single individuals) and to reduce Emergency Assistance (for low-income families or individuals facing a short-term financial crisis) remained intact.

The governor’s approach to state spending is to "fund what is essential, eliminate what is not needed, and demand more value for each tax dollar spent."3 By 1992, Michigan’s budget was stabilized, and the governor began enacting a total of 24 tax cuts, many aimed at workers and homeowners. According to state officials, several factors contributed to the stabilization of Michigan’s budget, including (1) a general reduction in state spending, (2) a reduction in the Medicaid growth rate from 14 percent in FY 1991 to a projected 4 percent in FY 1998, (3) a reduction in the number of permanent state employees, (4) maximization of federal financial participation, especially for Medicaid, and (5) a growing, healthy economy.

In 1994, Michigan also overhauled its method of funding schools, which previously relied heavily on property taxes for support. This previous financing mechanism led both to severe inequalities in funding between school districts and to higher tax rates compared with other states. The state reduced property taxes, increased sales taxes, and generated additional funds for education through the state’s lottery. These funds are placed directly into a special School Aid Fund that is available only for educational expenses.

While Michigan is currently in a strong fiscal position, several budget issues loom as matters of concern. Because Medicaid is such a large share of the budget, efforts to control costs are critical. Medicaid costs have been held at 20 percent of the state budget, and the state has been able to reduce growth rates as well. However, the state is attempting to hold Medicaid at a growth rate no higher than the growth of the general fund (about 3 to 4 percent). Given that this represents a substantial change from most of the state’s earlier experience, there is concern regarding the long-term fiscal consequences if the state is unable to keep Medicaid growth at this level.

Another area of particular concern is rising child welfare costs. In recent years, the statewide child abuse and neglect caseload has remained relatively stable. However, the number of juveniles the courts placed in the child welfare system increased by 9.3 percent from October 1995 to September 1996. Out-of-home placements, which are more costly, increased by 12.2 percent.

A final fiscal issue facing the state, the Durant vs. the State of Michigan court case, has been resolved after a 17-year battle. The Durant case was filed in 1980 by 84 school districts that charged that the state was not paying for mandated programs (mainly special education) as required by the "Headlee Amendment" to Michigan’s state constitution. A settlement was reached and legislation was signed in 1997 that allocates $211 million to the 84 plaintiff school districts. To avoid additional claims from the nearly 500 remaining school districts that were not party to the lawsuit, payments of up to $768 million will be made from the Budget Stabilization Fund and from bonds issued for infrastructure or technology developments. In addition, the legislation calls for increased spending for special education.


Setting the Social Policy Context

Social policy issues have been at the forefront of Governor Engler’s policy agenda since he was first elected. Although reform of the welfare system has dominated the social policy agenda, considerable attention has also been paid to creating a statewide workforce development system and, more recently, to making improvements in the state’s child welfare and child support systems.

In 1992, the governor unveiled his blueprint for income support and social services reform, To Strengthen Michigan Families. The initial document outlining the reforms identified 21 program directions and policy innovations to address a number of financial, health, education, employment, social, and community problems facing Michigan’s families. Additional policy changes to support the 21 policy directions originally outlined were added in 1994. In 1996, the blueprint was further revised to prepare for the receipt of anticipated federal block grants for welfare, child care, child welfare, and Medicaid. The 21 program directions that formed the core of the plan supported four major principles:

  • Encourage employment
  • Target support
  • Increase responsibility
  • Involve communities in solutions to problems

Within these four broad areas, To Strengthen Michigan Families proposed changes in Michigan’s welfare, child support, and child welfare systems. Although the plan was intended to bring about major changes in each of these program areas, administrative officials acknowledge that implementation of the suggested program changes has been uneven. While Michigan implemented virtually all of the reforms outlined for the welfare and child care systems, it has made far less progress in reforming the child welfare and child support systems. Administrative officials speculate that lack of progress in these areas reflects a lack of consensus on priorities and policy direction. Now that most of the governor’s agenda for welfare reform has been implemented, however, administrators anticipate that more attention will be paid to reforms in these areas.

Reforming Michigan’s employment and training/workforce development system has been another major priority of the Engler administration. The focus of this reform is integrating all employment and training services using a "No Wrong Door" system. Through this initiative, local areas are required to create an integrated employment services model for the unemployed and disadvantaged, but they have broad discretion in deciding the type of service delivery model they will use to do so. The goal of this initiative is to integrate services so that job seekers and employers can receive "services available through all the major workforce development programs... in a seamless, easily accessible, and customized manner."4

Organization of Services and Administrative Structure

Reorganization of government has been a hallmark of Governor Engler’s administration. This reorganization has been guided by a belief that agencies are most efficient if they can focus on a single mission. Thus, programs for low-income families that are the focus of this study are provided primarily by two cabinet-level agencies: the Family Independence Agency (FIA) and the Michigan Jobs Commission (MJC). FIA administers all income support and social service programs (including child care, child welfare, and emergency services) and also determines eligibility for Medicaid, and MJC administers all employment and training programs, including those targeted to recipients of cash assistance (see table 2 for an overview of programs and administrative arrangements). Two other departments, the Department of Community Health (DCH) and the Department of Education (DOE), also play major roles in the provision of services to low-income families. DCH administers all health and mental health programs. DOE oversees public education generally, prekindergarten programs, and initiatives to help young people make the transition from school to work.

The extent to which local organizations (including government and non-governmental organizations) are involved in the delivery of services for low-income families differs across program areas. For example, cash assistance and child care programs are administered and delivered by FIA staff, who are state employees. But some child welfare services and virtually all employment and training programs are provided by nongovernmental organizations at the local level. It is important to note, however, that the state maintains considerable control over the overall design and focus of nearly all programs for low-income families, even when these services are delivered by local entities.

The Family Independence Agency

Until April 1996, the Family Independence Agency had been known as the Department of Social Services. The name change signifies, in the state’s words, the "commitment to children, providing assistance to families moving toward independence and in supporting the transition from welfare to work."5

Administrative responsibilities in FIA are divided geographically between Wayne County (Detroit) and the outstate counties (balance of the state). In part, this division reflects the fact that Wayne County has just slightly less than half of the state’s assistance caseload. Each of the 83 Michigan counties has a county FIA director who oversees implementation of all FIA programs within the county. (In Wayne County, the director wears two hats—one as the staff person responsible for local operations and one as the FIA central office staff person responsible for Wayne County. Organizationally, the Wayne County director is at the same level as the director of outstate operations, but the Wayne County director also manages day-to-day operations in the county.) Depending on the size of the county, program services are provided either by its FIA office or by district offices within the county. Several of the larger counties, including Wayne, divide the county by ZIP code or some other geographic boundary. Clients then go to a specific district office based on where they live. With the exception of Wayne County, zone managers who oversee FIA operations in multiple counties provide the link between the state administrative structure and the county FIA offices. In Wayne County, the FIA director oversees all local operations and also is a core member of the state FIA policy staff. Zone managers in Wayne County report to the Wayne County director.

A three-member County Social Service Board, created by the state’s public welfare act, serves as the major link between the county FIA office and the county administrative structure. One member of the board is appointed by the governor, and the other two are appointed by the county commissioners. Currently, most Social Service Boards are primarily advisory bodies. At one point the boards received county money, but now many do not. They are responsible for functions such as interviewing and recommending new county directors, deciding how to spend state Emergency Services funds, and reviewing all contracts for services. They also receive feedback from the community and can share concerns or raise questions about local program operations.

Michigan Jobs Commission

The Michigan Jobs Commission was created in 1991 to administer all employment and training programs. After a protracted legal battle over the governor’s authority to reorganize some state government functions, in 1996 the Michigan Employment Security Commission, which runs the state Job Service, also became a part of the MJC and was renamed the Michigan Employment Security Agency. Along with workforce development and training programs, the MJC is charged with promoting economic development within the state, marketing the state’s tourism industry, and providing assistance to businesses either located in or thinking of locating in Michigan.

Local Workforce Development Boards serve as Michigan’s local decision-making bodies for employment and training programs. Each board is staffed by a local administrative entity called the Michigan Works! Agency. The MJC provides broad policy directives and guidance, but all decisions about service providers and service delivery are made by the local boards. The Michigan Works! Agencies are responsible for the day-to-day administration and oversight of the local programs under the purview of the boards. Until July 1997, actual program services could be provided directly by staff of the boards or by other organizations under contract with the boards. Starting in July 1997, however, to avoid potential conflict of interest between the board and providers of services, all boards must put programs out for bid. Because these decisions are left up to the boards, the types of agencies providing employment and training vary throughout the state. These boards are based on the former Private Industry Councils (PICs) that were created as a part of the Job Training Partnership Act (JTPA) program. The governor changed the name, purpose, and membership of these bodies to give them more authority. He believed that Michigan’s PIC members did not represent the major employers in the state or did not hold positions high enough in their organizations to exert any influence. Now the Workforce Development Boards are required to have representation of the largest employers in the local area and seek to have high-level representatives from those organizations at the table. (Some members of the advocacy community are concerned that this change represents a shift to viewing employers, rather than job seekers, as the customer.

Social Welfare Spending and Coverage

In FY 1996, Michigan’s expenditures and other uses of funds for governmental operations totaled $30.5 billion, for an average of $3,174 per state resident.6 Expenditures for K–12 and higher education accounted for 36 percent of the total budget, and expenditures for health, welfare, and social service programs accounted for an additional 30 percent. Of the amount spent on health and welfare programs, $5.5 billion was spent on Medicaid and $1.7 billion was spent on the Aid to Families with Dependent Children program, known in Michigan as the Family Independence Program (FIP). Table 3 summarizes social welfare spending for families with children in Michigan in some of the major federally supported programs. State funds account for about one-fourth of the total cost of these programs. Combined federal and state spending per poor family in Michigan for income support, education and training, child support, and health programs is higher than spending per poor family in the country as a whole. In contrast, spending on child care, food security, and emergency assistance programs is lower. With the exception of spending on adoption assistance, which is higher than in the country as a whole, child welfare spending per poor family in the state mirrors spending per poor family in the United States.


Basic Income Support Programs

Income support in Michigan reflects clear philosophical themes: require able-bodied recipients to take steps to become self-sufficient; help recipients to remove any potential barriers to employment; continue to provide income support to recipients with low earnings; and provide cash assistance to recipients who are unable to work or who try to find work but fail. Michigan started to change its income support programs in October 1991 when the General Assistance program ended and 80,000 single, able-bodied, childless adults were no longer eligible for cash assistance. Significant reform continued as Michigan began implementing the governor’s comprehensive To Strengthen Michigan Families initiative in 1992. These reforms primarily focused on transforming the AFDC program into a more work-oriented, transitional assistance system. To symbolize the new system and to reflect implementation of the state’s block grant plan, in October 1996 the name of the AFDC program was changed to the Family Independence Program (FIP).

An Overview of Michigan’s Income Support Programs

The major income support programs in Michigan are Food Stamps and FIP. Other smaller income support programs include the State Family Assistance (SFA, now called State FIP) and State Disability Assistance (SDA) programs. SFA provides benefits to families who, because of their particular circumstances, do not meet the eligibility criteria for FIP, and SDA provides financial assistance to disabled persons who are not eligible for SSI.7 Like many other states, Michigan also provides a state supplement to recipients of the Supplemental Security Income (SSI) program for elderly and disabled individuals.

The data presented in table 4 summarize the size and relative generosity of each of these programs during FY 1996. By a wide margin, more Michigan residents (895,834) participate on a monthly basis in the Food Stamp program than in any of the other income support programs. About 60 percent of these residents are members of households with children who are participating in the Family Independence Program. With 526,079 residents receiving benefits, FIP is the second-largest program, followed by SSI (primarily single adults) with 209,543 recipients. SDA and SFA are substantially smaller, with 8,864 and 3,800 recipients respectively. Benefits per person ranged from $71.97 in the Food Stamp program to $355.56 in the SSI program.

The Family Independence Program: Benefit Levels and Caseload Trends

The Family Independence Program is the primary source of income support for nonworking families in Michigan. Families receiving cash assistance from this program receive more assistance than families in most states. In 1995, families in Michigan received, on average, a monthly assistance payment of $414, compared to an average of $381 for the United States as a whole. The average monthly cash income in 1995 for all AFDC/FIP families in Michigan was 50.0 percent of the poverty line, substantially higher than the U.S. mean of 41.3 percent and the median of just 34.3 percent. As is true in most states, the vast majority of families receiving assistance (79.3 percent) are families headed by a single adult. Just 8.8 percent were headed by two adults and 11.9 percent were "child only" cases with no eligible adult receiving assistance.8

Reform of AFDC/FIP started in earnest in late 1992, shortly after the governor unveiled To Strengthen Michigan Families. The state received permission from the U.S. Department of Health and Human Services to implement its proposed reforms through the Section 1115(b) waiver process in August 1992 and implemented them beginning on October 1, 1992. Michigan’s waiver was amended and further changes were implemented in October 1994 and June 1996. In December 1995, Michigan passed a welfare reform bill (P.A. 223) in anticipation of federal welfare reform. The federal law that passed almost nine months later mirrored many of the key provisions in Michigan’s legislation. Both stressed participation in work or work-related activities, and both required teen parents to live at home or in a supervised setting. Michigan therefore was well poised to adapt to the new federal welfare reform legislation passed in August 1996. Michigan was the second state, after Wisconsin, to submit its state plan to the U.S. Department of Health and Human Services, and it began operating its new income support program—the Family Independence Program—on October 1, 1996.

As is true in many states, Michigan has experienced a substantial decline in recent years in the number of families receiving cash assistance. The state attributes this decline to a very strong economy and the work-based reforms the state has implemented over the last five years. In October 1991, a year before Michigan implemented its first reforms, 225,936 families received AFDC/FIP benefits. A year after the reforms were implemented (October 1993), the AFDC/FIP caseload increased somewhat, to 228,094 families. The AFDC/FIP caseload started to decline in March 1994, just after the state sent its second round of waivers to Washington for approval. In February 1997, after 35 consecutive months of caseload declines, 153,270 families were receiving assistance from FIP, 34.4 percent fewer than at the program’s peak of 233,595 families in April 1991.

The Family Independence Program: Requirements and Expectations

Since 1992, when the governor’s initiative was first implemented, AFDC/FIP policies have increasingly focused on the movement from welfare to work. The initial cornerstone of that initiative was a social contract—a requirement that welfare recipients engage for a minimum of 20 hours per week in activities that would lead to their personal growth or to their community’s enhancement. Although work was the preferred social contract activity for all recipients, other activities such as volunteering in a child’s school or participating on a tenant advisory committee were permitted. Participation in social contract activities was higher than expected. As of September 1994, 72 percent of AFDC recipients expected to participate in the social contract did so, and 60 percent were participating for 20 hours per week or more.9 Program administrators believe the social contract was extremely important as a first stage of reform because it set the stage for requiring recipients to do something in exchange for receiving cash assistance from the government.

During this first stage of reform Michigan also implemented program changes that (1) allowed welfare recipients to keep more of their grant while working, (2) broadened eligibility for two-parent families, and (3) allowed AFDC children to earn and save without effect on program benefits. An independent random assignment evaluation of families receiving AFDC benefits when these program changes were implemented concluded that, two years after implementation, the reforms had increased adult employment, reduced welfare participation, and increased work for those receiving welfare.10

Since 1994, Michigan’s reforms have focused more directly on program and policy changes designed to help recipients make the transition to unsubsidized employment. These policies have been implemented through two primary initiatives: Work First, a statewide initiative designed to help recipients find unsubsidized employment; and Project Zero, a pilot project to reduce to zero the number of recipients who are required to work but are not doing so.

Work First

Work First is a statewide mandatory job readiness/job search program for AFDC/FIP recipients, operated jointly by the Family Independence Agency and the Michigan Jobs Commission. FIA has responsibility for determining who is required to participate in Work First, referring recipients to the program and providing case management. MJC, through the local Michigan Works! Agencies, is responsible for providing program services such as a job club or other forms of job search assistance and for placing recipients into unsubsidized jobs. The goal of the Work First program, which began on October 1, 1994, is to move AFDC/FIP recipients into part-time or full-time work as quickly as possible. Approximately three-quarters of recipients in Michigan are required to participate in Work First. Recipients not required to participate include those who are (1) employed 20 or more hours per week, (2) severely disabled or caring for a severely disabled child or spouse, (3) mothers caring for a child under the age of 12 weeks, or (4) over age 65 or under age 16.

Work First includes the following key features:

  • Mandatory orientation before an application for assistance is approved. (This provision was not implemented until October 1, 1996.) Neither an AFDC/FIP nor a Food Stamp case is opened for applicants who do not participate in Work First orientation. All applicants, including those who may eventually be exempted from participation in Work First, are required to attend orientation. (Families who do not meet this requirement can submit a separate application for food stamps only and would then be subject to any Food Stamp employment and training requirements.)
  • Continuous participation until unsubsidized employment is found. After orientation, new applicants are expected to participate in a Work First activity within 10 days. Ongoing cases are referred to Work First orientation at their yearly eligibility redetermination. Participation is then required until participants find employment for at least 20 hours a week in a minimum wage job or are deferred from participation.
  • Stringent sanctions for noncompliance. From October 1994 through April 1997, families who did not participate in Work First lost 25 percent of their FIP and Food Stamp grant. After 12 months of continued noncompliance and a face-to-face meeting, the recipient’s case was closed. As part of Michigan’s Temporary Assistance for Needy Families (TANF) plan, beginning in April 1997, noncompliant cases are closed sooner. If new applicants are not participating in Work First within 60 days, their cases are closed. Noncompliance that occurs beyond the 60th day results in a 25 percent reduction in the grant (both cash and food stamps) for four months, followed by case closure. Workers are strongly encouraged to meet with a recipient before a case can be closed, but this is no longer required. Once a case is closed, it must remain closed for a minimum of 30 days before the client can reapply for assistance.
From October 1996 through January 1997, 11 the Work First program had received 93,599 referrals from FIA for joint orientation and enrolled 59,980 in the program. This is not an unduplicated count of FIP clients, because a client could be referred to Work First more than once (for instance, a client who initially did not participate or a client who lost a job and was rereferred). Also, not all clients referred to joint orientation will be eligible to enroll in the Work First program (the applicant may be ineligible for FIP, for example, but that determination is not made until after attendance at the joint orientation). Of those enrolled, 43,991 (73 percent) attended an activity and 22,140 (37 percent) found employment. During that same time period, approximately 5,200 cases were in sanction status for failure to comply with Work First requirements.12

At the time of the site visit, workers did not believe that the stringent sanctions for noncompliance were used more frequently than before the new reforms were put into place. Staff perceived that more sanctions were levied five years ago, but now staff are seeing clients who want to participate and have their sanctions removed. However, staff perceive that under Work First (as opposed to prior welfare-to-work programs) clients are not given as many second chances to comply with program requirements.

A study of families whose cases were closed because of sanctions in April 1996 found that the typical client was 32 years old, had a 10th or 11th grade education, had been receiving AFDC for five years before case closure, and was receiving assistance for two children when the case closed. The primary reasons sanctioned families gave for not being able to meet the work requirements included transportation, child care, and health problems. When interviewees were asked what difficulties they had encountered since their cases closed, the major problem areas mentioned included not having enough food, having difficulties paying utility bills, not having access to medical assistance, and being evicted. When former recipients were assessed in terms of their contact with child protective services, sanctioned cases typically had 50 percent more abuse, neglect, and referrals than a comparable group of AFDC cases. However, it did not appear that contact with child protective services escalated after families experienced the sanctions.13

Project Zero

In July 1996, Michigan implemented Project Zero as a one-year, six-site welfare reform demonstration project. The project was implemented in six localities across the state, accounting for less than 5 percent of the AFDC/FIP caseload (Alpena, Menominee, Midland, and Ottawa counties and the Romulus and Tireman district offices in Wayne County). The sites were chosen based on demographic and geographic representation, urban/rural characteristics, and level of voluntarism in the community. The project has been continued beyond one year in the original six sites and is being expanded to an additional six sites.

In order to move toward the goal of zero unemployment among AFDC/FIP recipients who are expected to work, Project Zero sites were provided with increased resources that were primarily used for child care and transportation. In a recent survey, Project Zero program administrators reported that the extra resources for transportation were especially important, although many experienced difficulties putting alternative transportation systems into place.14 Additionally, the Project Zero sites served as pilots for the state’s new classification of welfare workers—the Family Independence Specialist (FIS) and the Eligibility Specialist (ES). The FIS worker carries smaller caseloads (about 65 cases in these sites), provides case management to families on cash assistance, and conducts visits to clients’ homes in an effort to remove any barriers to employment. FIS workers are responsible for working with families to identify and resolve any actual or potential barriers to employment. Eligibility Specialists handle noncash assistance cases (for example, Food Stamp or Medicaid only cases) and nonfamily cases (for example, State Disability Assistance cases).

Although the primary goal of the demonstration—attaining zero unemployment— has been reached in only one of the sites (Ottawa County), the six sites do show higher rates of cases with earned income than the rest of the state.15 For example, in February 1997, 54 percent of Project Zero cases who are expected to work had earnings during the month, compared with 35 percent of cases in the balance of the state. There was substantial variation across the sites, however. The percentage of cases without earned income in the Project Zero sites ranged from a low of 30 percent in Alpena County to a high of 54 percent in the Tireman/Central district office, the only Project Zero office in the city of Detroit.

What is less clear is how these results have been achieved. Some observers are of the opinion that simply casting a spotlight on these sites has improved outcomes. The sense is that staff in the sites are behaving differently, because they know the rest of the state (and even the nation) is watching. Others wondered whether some of the good results have been achieved because clients may be moving out of these areas. Others believe that smaller caseloads and more concerted efforts to eliminate barriers to employment have, in fact, contributed to the higher rates of employment.

Additional Policy Changes

Although most of Michigan’s efforts to reform the welfare system have focused on policies to encourage recipients to find work, other changes have also been implemented. Applicants must verify that their children are immunized and that all household members have Social Security cards. The application process itself, however, has been somewhat streamlined. Beginning November 1, 1996, the state began using a shortened application form (six pages with attachments as opposed to 20 to 25 pages). Michigan also requires minor parents (those under age 18) to live at home or in an adult-supervised setting. In addition, the minor’s parent (the grandparent of the baby), rather than the minor, must apply for assistance. If the case is eligible for assistance, then the grandparent, unless employed or deferred, must comply with all Work First requirements. The minor parent must be in school, or she too will have to meet the work requirements. If the minor parent is under age 16, she is not subject to participation in Work First, but must be attending school as a condition of this exemption.

Over the last five years Michigan has implemented numerous changes in its income support programs to change recipient behavior and to create an income support system whose foundation is work. State and local officials acknowledge that much work remains to be done to transform the current income support system into a transitional assistance system that encourages and supports recipients’ efforts to find employment. Yet the work that lies ahead is primarily that of implementation and not of policy development. Thus, future program changes in Michigan are likely to take place in local offices where services are delivered, rather than at the state level where policy decisions are made.


Programs Focused on Achieving Financial Independence

In the initial To Strengthen Michigan Families document, the state set forth to "equip all people in Michigan with the job skills needed to succeed [and to] assure incentives or requirements for them to seek a job, take a job, and to keep it."16 While Work First is the primary program offered by the state to help welfare recipients find unsubsidized employment, welfare recipients and other low-income individuals have access to a variety of programs in Michigan that are designed to improve their skills and enhance overall workforce development. The state also supports the transition to work by offering a near-entitlement to child care for income-eligible persons. Additionally, the state has recognized the need to expand child support enforcement efforts and medical services in order to help move families toward self-sufficiency.

Employment and Training Services

The success of two of the governor’s priorities—attracting new businesses to Michigan and welfare reform—depends at least in part on the state’s ability to prepare its citizens for the labor market. Thus, a central mission of the Michigan Jobs Commission is to ensure that workforce development services are available to those who need them and that they are easily accessible, preferably through a seamless service delivery system. The first step toward achieving this mission was the consolidation of all employment and training programs under one administrative entity. Until Governor Engler created the MJC, employment and training programs were scattered throughout the government. For example, the Department of Corrections ran employment programs for exoffenders and the Family Independence Agency ran programs for welfare recipients. Now, the MJC oversees all of these programs. Michigan is one of the few states that has transferred full authority for the operation of its welfare-to-work program to an agency that is administratively separate from the agency that authorizes the receipt of benefits.

In many states and localities, employment and training for welfare recipients are a small part of a much larger whole. In Michigan, Work First accounts for the largest share of resources devoted to specific employment and training programs in the state. With $82.5 million in funding (including $32.1 million in state funding), the Work First budget accounts for about 14 percent of the total MJC budget. At the local level, Work First accounts for an even greater share of agency budgets. For example, in 1996–97 the city of Detroit expected about $17.5 million in funding for the JTPA program (including funding for programs for adults, youth, and dislocated workers) and $27.4 million in funding for Work First.17 Consequently, the overall direction of employment and training policy for low-income residents in the state is often driven by the focus of Work First.

Nonetheless, the MJC believes that the independent identities of different employment and training programs are eroding and that a seamless workforce development system can be created. The governor’s "No Wrong Door" initiative was to be implemented in every local community by July 1, 1997, and is meant to be the primary mechanism through which this seamless system will be created.

The No Wrong Door system is designed to meet two primary goals: (1) to build a skilled competitive workforce in Michigan, and (2) to ensure effective use of scarce employment and training resources.18 Any employer or any job seeker may access the No Wrong Door system and receive a basic set of services, free of charge. For employers, these services include assistance with activities such as recruiting or screening potential employees, identifying training needs and developing training plans, or providing labor market information. For job seekers, basic services include self-service, computerized job listings, personalized job search planning, and job search assistance.19

Through a local No Wrong Door system, customers must have access to JTPA programs, School-to-Work, Employment Services, Unemployment Insurance, and Work First. In practice, a person coming into an agency offering any one of these programs should be linked to all other services for which she or he is eligible. Conversely, a person already participating in a program, such as Work First, should also be able to gain access to other programs and services that are part of No Wrong Door.

Localities have some flexibility in choosing how to integrate employment and training services under No Wrong Door. Some areas plan to use electronic links and integrated service delivery so that clients can enter the employment and training system at multiple points, but no one point would be a "wrong door." Other areas may choose a "Hub and Cluster" model, whereby users enter the system at multiple points, but these points are all linked to a main service center. Other areas may interpret "No Wrong Door" to mean one-stop shops, with various programs and agencies colocated in one center. Some areas may choose a combination of these models. Detroit’s No Wrong Door system, for example, will involve both physical colocation of agencies and computer links between them. Four one-stop centers are being established, although some participating agencies will be hooked electronically to these centers.

In recent years, employment and training programs in Michigan have increasingly focused on "employment" as opposed to "training." The emphasis is especially apparent in Work First. Localities have a broad model from the state to follow for Work First, and long-term training is not prohibited. However, training is discouraged as the first option for participants, and its use is monitored.

The movement to work and work search as the primary employment and training activities is a fairly recent occurrence. When the Work First program was implemented in late 1994 it was technically part of the state’s existing Job Opportunities and Basic Skills (JOBS) training program, then called the Michigan Opportunities and Skills Training (MOST) program and focused primarily on placing recipients in education and training programs. Until April 1997, recipients who did not comply with Work First were referred to MOST for conciliation and sanctioning. Now, these activities are handled by the Family Independence Specialist. At the time of the site visit, the MOST program was being phased out (it was eliminated entirely by July 1997), but participants enrolled in post–secondary education programs before October 1994 are allowed to complete their programs.

Advocates strongly oppose the shift away from education and training, because they believe it is shortsighted and diminishes prospects for welfare recipients to move into good, well-paying jobs and off public assistance. Most program administrators, on the other hand, believe that the current emphasis on employment is justified, given the availability of jobs. In an effort to provide some welfare recipients with the opportunity to upgrade their skills, the governor recently announced that recipients who are working at least 20 hours a week will be permitted to enroll in education or training programs through Work First.

Child Care

Since the initial implementation of To Strengthen Michigan Families , the provision of child care has been viewed as an integral part of Michigan’s efforts to help welfare recipients find and sustain employment. Currently, child care assistance is available to all welfare recipients who are looking for work and for all working families whose incomes fall below 85 percent of the state median income.

Michigan does not have a waiting list for subsidized child care and hopes to continue offering child care as an entitlement across all eligibility categories. The state, however, has set target group priorities for child care assistance, anticipating that child care caseloads are likely to continue to increase and at some point the state may be unable to provide child care to all families who are currently eligible. The most recent To Strengthen Michigan Families plan (1996) set the following priority for families to receive assistance with child care:20

  • Public assistance recipients working or participating in education and training programs
  • Foster parents
  • Certain families receiving child protection and prevention services
  • Low-income families who are working
  • Low-income families who are working 20 hours a week and attending high school
  • Low-income families who are working 20 hours a week and attending college

This ranking reflects the state’s emphasis on work and the importance of support for the transition from welfare to self-sufficiency.

Administrative and Service Delivery Structure

The Family Independence Agency manages all child care funding and fully administers the Child Care Services program. Head Start and the Michigan School Readiness Program, two statewide child development programs, are separate from the Child Day Care Services Program and have their own entry processes. Head Start is targeted to children ages three to five from families with incomes below the poverty level. The School Readiness program, administered by the Department of Education, is primarily restricted to four-year-olds (a limited amount of funds is available to serve three-year-olds); half of the children served by the program must live in families with low incomes (defined as eligible for free or reduced lunch or eligible for Michigan’s day care program— generally, about 200 percent of the poverty level).

Service Delivery Structure

As of November 1996, the Child Day Care Services Program became a fully unified system across all eligibility categories. Payment systems, reimbursement rates, policies, and regulations apply to the system as a whole, with few or no discrepancies across categories. It is a seamless system, both in terms of administration within FIA and in terms of families receiving assistance. In other words, there is little change in how families access the system as they transition from welfare to work. The only significant difference between eligibility categories is the financial responsibility of the families. Care for children in the child welfare system and for children in families receiving assistance from the Family Independence Program is fully paid by the Child Day Care Services program, with no income contribution from the families. For income-eligible families, there is a sliding fee scale that determines the level of the family contribution toward the cost of care. These families can be expected to pay between 5 and 70 percent of the cost of care.

Families that receive subsidies through the Child Day Care Services Program can use any licensed day care center or group day care home, or any registered family day care home that has a space available and will accept FIA payments. Families may also use an In-Home Aide or a Relative Care Provider, who must be enrolled by the local FIA office. Current caseload statistics show that 56 percent of the caseload use regulated care, and 44 percent use relatives and in-home care aides.21 All payments for care take the form of direct payments to providers based on an hourly rate that accounts for the geographic area, the child’s age, and the day care setting. The state does now have a few contracts for child care slots to provide care for the children of clients attending Work First orientation.

Michigan began to unify its child care system on July 1, 1992, as a part of To Strengthen Michigan Families , but full unification of the system did not occur until after the passage of PRWORA. Before November 1996, working AFDC/FIP recipients received child care assistance primarily through the AFDC/FIP child care disregard. Recipients paid for child care on their own and were "reimbursed" for their expenses in the form of a higher AFDC/FIP grant. By relying on the AFDC/FIP system to subsidize child care, Michigan could share the costs of subsidizing child care for working AFDC recipients with the federal government. Once PRWORA was passed and AFDC/FIP and child care funds were provided to the state in the form of a block grant, there was no longer any advantage to maintaining this system.

Coverage and Funding

The Child Day Care Services Program subsidized the child care expenses of, on average, 26,351 families per month in FY 1996, with a total number of 115,307 children from 68,207 families served throughout the year.22 In May 1996, the total number of children receiving child care was 46,143.23 In FY 1996, an additional 15,000 AFDC/FIP families with earnings had their child care subsidized through use of the child care disregard.24 In the 1995–96 academic year, 31,151 three- to five-year-olds participated in Head Start and 21,077 four-year-olds participated in the School Readiness Program.25

Before November 1996, when AFDC/FIP families who used the child care disregard available to them under the old AFDC/FIP program were not included in this caseload, non-AFDC/FIP families whose income made them eligible comprised 80 percent of the total caseload in the Child Day Care Services System.26 Based on rough figures that estimate the number of AFDC/FIP families affected by the conversion from the child care disregard to subsidies, non-AFDC/ FIP, income-eligible families now comprise more than two-thirds of the total caseload.27 If waiting lists develop with an increased demand for child care as a result of the state’s priorities for helping AFDC/FIP recipients make the transition from welfare to work, low-income working families would be the first to lose child care assistance.

Despite some debate about whether resources are spread too thinly across families, adequate funds appear to be available under the current system, as indicated by the lack of waiting lists for child care. In addition, a state commitment to child care is reflected in increasing funding levels over recent years. In FY 1995, total funding for child care was approximately $83 million, with the majority (nearly 80 percent) coming from federal sources. FY 1995 was the first year that Michigan drew down its full share of available federal child care funding. Michigan’s child care budget increased to $141 million in FY 1996 and $185 million for FY 1997.

The Michigan School Readiness Program, initiated through state legislation 10 years ago, is fully state-funded, with an FY 1996 funding level of $63 million. In FY 1995, Michigan received nearly $133 million in federal funds for Head Start programs. There is no state supplemental funding for the Head Start program, although the state does allocate some Child Care and Development Block Grant funds that allow some Head Start programs to operate full-day, year-round (wraparound) programs. Last year, approximately $500,000 in block grant funding was used to provide wraparound services in 12 Head Start centers.

Challenges

The biggest child care challenge for Michigan is meeting the increased demand for child care with an adequate supply of caretakers. While 2,000 new day care facilities have opened since 1994 (this is not exclusive to subsidized care),28 the number of day care licensing staff in the Department of Consumer and Industry Services has been shrinking as a result of early retirements and other resignations. Because of a state hiring freeze, staff have not been replaced, and the licensing system is unable to keep up with demand and license providers in a timely fashion. (By mid-1998, more staff had been hired, and the state reports no delays in processing.) In addition, increases in requests for child care assistance have made it difficult for AFDC/FIP workers to process requests for assistance in a timely manner.

Overall, the growing need for child care has sparked increased coordination and collaboration. Discussions to consider greater avenues for collaboration have been taking place between the child care and child development communities within the Department of Education, the Family Independence Agency, and Head Start. For example, the state’s Child Care Task Force meets every month, and in 1995 the governor established the Advisory Committee on Day Care for Children to make recommendations for improving the state’s subsidized day care system. An effort is under way to produce a joint application for children enrolled in the Michigan School Readiness Program who are also eligible for subsidized child care. In 1995, 17,705 children participated in the School Readiness Program, approximately 30 percent of them in families that receive AFDC/FIP. The Michigan Department of Education estimates that between 40 and 50 percent of the "at-risk" children in the School Readiness Program are eligible for day care. The state has also hired an individual (paid for with federal funding from the Head Start Collaboration project) to serve as the liaison between the Head Start community and the state Child Day Care Services program.

Policy misalignments create the strongest barriers to coordination between child care and child development programs. Definitions of eligibility are not compatible across programs (for example, income eligibility is set at different levels for Head Start, School Readiness, and the Child Care Services program), and hours of covered care often are not complementary (for example, Head Start and School Readiness provide care at the same part-time hours, leaving private care to fill in full-day care). Per child caps on expenditures that vary across the programs are also a source of tension.

Child Support

Administrative Structure

Because of its unique administrative and legal structure, child support in Michigan involves a complex set of state and local relationships that make change difficult. Child support field staff are housed in local FIA offices, but also involved in the child support process are the Friend of the Court (FOC) and the county Prosecuting Attorneys. Michigan has 64 FOCs who report to the chief judge of the circuit court. The FOCs, created in 1917 through legislation, have been operational since 1919 and handle only child support cases. The FOCs have responsibility for enforcement of orders, review and modification of orders, and the making of recommendations regarding support for pending divorces. The FOCs are independent bodies funded by county, state, and federal government resources; a Friend of the Court Bureau in the state supreme court collects information on FOC actions and sets state guidelines but has no supervisory power over the FOCs. Another entity, the Prosecuting Attorneys, establishes orders for all cases in the state’s Child Support Enforcement Services program, including public assistance cases, and performs all in-court work. During the economic downturn, Michigan made a concerted effort to increase the number of child support cases that went through the federal Child Support Enforcement (IV-D) system. Now, between 92 and 95 percent of its cases are IV-D cases (named for a section of the Social Security Act).

Child Support staff in the local FIA offices are the first point of contact for families applying for FIP, Title XIX (Medicaid), and Food Stamp benefits who need to have a child support order established. Child Support staff also provide the same services to any member of the general public who requests those services, regardless of income level. FIP, Title XIX, and Food Stamp recipients who do not cooperate with child support requirements face the same penalties as families on FIP who do not comply with the work requirement—the noncooperative custodial parent loses her/his eligibility (for FIP, Medicaid, or food stamps) for four months and then the case is closed unless the recipient moves into compliance.

Child Support Reforms

Changes to Michigan’s child support system were included in the original 1992 version and subsequent versions of To Strengthen Michigan Families. However, a lack of consensus on priorities; tension over federal, state, and county roles; and the fragmented nature of the child support service delivery system have made it difficult to implement all of the proposed changes. Because Michigan state law contains very specific requirements regarding child support enforcement, most changes require the consensus of all the relevant actors. In spite of these difficulties, some significant child support changes have been implemented successfully:

  • Allowing child support orders to be reported to credit bureaus as a financial obligation
  • Requiring hospitals to accept and record acknowledgment of paternity at the time of birth
  • Ensuring that children are included in the health care plans of parents with child support obligations
  • Authorizing the Department of Treasury to collect child support arrearages owed to the state for former recipients of FIP
  • Requiring noncustodial parents who are not providing financial support to participate in high school or GED completion, community service, or job training
  • Denying or revoking professional, business, or trade licenses for persons with child support arrearages or without an approved payment plan

Proposed initiatives that have not been implemented include:

  • Requiring the inclusion of Social Security numbers on drivers’ licenses and license plate tab applications and withholding vehicle registration upon notice from a Friend of the Court that a noncustodial parent is delinquent in meeting the child support obligation
  • Requiring employers to withhold child support obligations from pay-checks of all new employees immediately
  • Encouraging the courts to use an expedited administrative rather than a judicial process to establish child support orders and examining current guidelines for setting support amounts
  • Examining the use of private collection agencies to obtain collections

Michigan does very well in establishing paternity, in part because this can now be done in the hospital. Once this hospital process was put into place, paternity establishment rates increased dramatically. The rate had been 65 to 75 percent up to 1994, and state officials believe it is currently around 97 per cent, with about half of all paternities established in the hospital. According to state officials, concerted efforts to publicize the establishment of paternity and decriminalization of the paternity establishment process have both helped the state to achieve such high rates. Paternity establishment orders do not have to be filed in court to be valid, but instead may be filed with the Department of Community Health, which can then include the order on a central registry that it is now building.

Over the past 10 years, the amount of Michigan’s child support collections through the IV-D enforcement system has increased substantially, from $341.1 million in FY 1985 to $921.9 million in FY 1995. However, most of the growth in child support collections has been for non-FIP rather than FIP cases. Reported collections for non-FIP cases increased 232.5 percent from FY 1985 to FY 1995, compared with an increase of just 42.9 percent for FIP cases. Additionally, declines in recent years in the AFDC/FIP caseload have resulted in lower aggregate collections for AFDC/FIP cases whose child support payments are assigned to the state. For example, the state collected $172.3 million on behalf of current or former AFDC/FIP recipients in FY 1993 but only $164.7 million in FY 1996. 29

Funding

Funding for child support enforcement is an ongoing problem in Michigan, and declines in FIP caseloads are thought to worsen the situation. In general, counties experience considerable difficulty securing local resources to fund child support activities. The state has been more successful in securing funding, particularly for enforcement activities that are cost-beneficial to the state. For example, counties could not get funds for enforcement activities to track down health insurance. However, the state was able to secure funding because it stood to gain from its investment: A $1.8 million investment saved the state $7 million in Medicaid costs.

The relationship between the FIP caseload and child support funding is complex but critically important. Last year Michigan received $23 million in incentive payments from the federal government for child support collected on behalf of FIP recipients. (Most of this money—$16 million—was returned to the counties. While some counties use this money to fund child support activities, there is no requirement that they do so.) The state estimates that it lost an additional $15 million in incentive payments for FIP cases that became non-FIP cases. As long as the FIP caseload continues to decline, the state is likely to continue to receive less in incentive payments from the federal government than it has received in the past. State officials hope that the federal government will approve a new incentive formula that takes into account whether a family has ever received FIP rather than whether it is currently receiving FIP. Under the current system state officials feel that they are being penalized in their child support system for successes in their FIP reforms.

Medicaid and Other Health Programs30

Medicaid is the main health program available to families not covered by private health insurance. Michigan is in the process of shifting nearly all Medicaid beneficiaries to a capitated managed care system. The state expects that this shift will improve health care access for low-income families, because they will have a primary physician and will not have to seek out a provider who accepts Medicaid beneficiaries.

Another change in the health care system, although on a smaller scale, allows welfare clients in Project Zero sites to continue Medicaid coverage after they have exhausted their transitional Medicaid benefits. All welfare recipients in Michigan are eligible for up to 12 months of transitional Medicaid after their case closes on the basis of earnings. Clients in the Project Zero sites who do not have employer-based coverage and whose transitional Medicaid is ending may continue coverage by paying part of the premium. Michigan received a waiver from the Health Care Financing Administration of the U.S. Department of Health and Human Services to operate this program, but the waiver currently applies only to the Project Zero sites.

Governor Engler had proposed expanding Medicaid coverage for children. Currently, coverage is available for all children ages 16 and under from families with income below 150 percent of the poverty level. His proposed expansion would have opened eligibility to children through age 18 living in families with income below 185 percent of the poverty level. However, because Medicaid was not block granted at the federal level, the state did not have the funds to implement this change. Instead, Michigan will create its own state health program, MIChild, for children of low- and moderate-income working families. Funds recently made available through the 1997 federal budget reconciliation bill will be used to support this program.

Beyond minor changes in Medicaid and the new program for children, Michigan has put into place limited programs to address the health care needs of the uninsured. Recipients of two state income support programs, State Disability Assistance and State Family Assistance, receive medical assistance through a state-funded State Medical Assistance program. Like some other states, Michigan has a Blue Cross/Blue Shield Caring Program for Children, which provides limited health benefits to 4,500 low-income children. Wayne County, which includes the city of Detroit, has developed a program called Plus Care that serves about 40,000 individuals, and a program called Health Choice that covers 4,000 individuals using funding from employers, employees, and the county. Together, these programs reflect a quite modest effort to address the needs of a portion of the uninsured population.


The Last-Resort Safety Net Programs

Some families require assistance to address serious and immediate needs beyond financial support. Child welfare services and emergency assistance are classified under this category, as part of the state safety net that serves families that are facing internal strife or that are unable to meet basic needs, such as food and shelter. Provision of these services in Michigan rests primarily on two of the four principles laid out in To Strengthen Michigan Families : target support and involve communities. While Michigan has reduced its expenditures for emergency assistance in recent years, expenditures for child welfare services have increased.

Michigan’s last-resort safety net programs are fairly separate from the income support and employment and training systems. For example, even though child welfare services are housed within FIA, separate workers handle these cases and there is little interaction between staff that work with families receiving cash assistance and staff that work with families receiving child welfare services. Emergency assistance programs are handled by the same staff that handle cash assistance. However, because the state has scaled back these programs and tightened eligibility requirements, nonprofit organizations often play a larger part in the provision of these services than FIA staff.

Child Welfare Services

In recent years, the governor, the state legislature, and the media have all begun to focus more attention on Michigan’s child welfare system. Governor Engler first proposed child welfare reforms as a part of To Strengthen Michigan Families. In 1995, by executive order, he created the Children’s Commission to review laws, programs, and procedures in child welfare and to make recommendations to the governor. The commission released its recommendations in 1996, and the state allocated money in the FY 1998 budget to begin implementing some of those recommendations. At the heart of the policy debate over child welfare is whether Michigan has placed too much emphasis on family preservation (keeping children in their own homes and with their birth families) and not enough emphasis on removing children from their homes once abuse and neglect have been substantiated and on terminating parental rights for parents who repeatedly fail to improve the circumstances of their children.

Caseload and Funding

Child welfare services are administered by the state’s Office of Children’s Services within the Family Independence Agency. While counties play a larger role in the provision of child welfare services than they play in the provision of income support programs, all major child welfare policy decisions are made at the state level.

In September 1996, 16,426 children made up Michigan’s statewide foster care caseload. The majority of the caseload (60.9 percent) were in out-of-home placements; 23.6 percent were in relative placements; 12.6 percent were living at home; and the remainder (2.9 percent) were in Independent Living programs, boarding schools, or runaway service facilities.31

Although the majority of children in Michigan’s child welfare caseload are in out-of-home placements, Michigan has lower substantiation and out-of-home placement rates than other states, reflecting Michigan’s emphasis on family preservation. In 1993, the state ranked 37th in the nation for the number of youth in out-of-home placements and 41st (out of 47 states) for substantiated cases of abuse or neglect.32 While the number of referrals to Child Protective Services has increased throughout the 1990s, the number of children in out-of-home placements has remained very stable. An increasing number of adoptions and a lower substantiation rate could account in part for this trend. According to several sources, in recent years the substantiation rate has dropped to between 16 and 19 percent of investigations.33

More than half of the costs of child welfare programs in Michigan are funded with federal dollars. Federal funding sources include the Social Services Block Grant and Titles IV-B, IV-E, and IV-A (Emergency Assistance) of the Social Security Act. Michigan has not used Medicaid funds (Title XIX) to pay for child welfare case management, although it is looking into maximizing these federal funds.

Counties fund some services that benefit child welfare clients, although these funds account for a very small share of all child welfare expenditures. In particular, counties pay half of the costs for child welfare clients who are not eligible for federal reimbursement through Title IV-E. In FY 1996, in an average month, county-funded child welfare clients accounted for just 15.7 percent of the child welfare caseload.34 Counties can also use discretionary funds for social services for families in the child welfare system or at risk for child abuse and neglect, regardless of whether those families are in the child welfare system.

Program Focus

FIA literature states that to protect children best, services "must be child-centered and family-focused." In keeping with this family-focused philosophy, Michigan operates one of the most extensive family preservation programs in the country. While the majority of the foster care caseload and accompanying resources are still concentrated in out-of-home placements, the state has a significant framework in place to prevent out-of-home placement through family support, family preservation, and prevention programs. In recent years, most of the state’s child welfare innovations have been designed to enhance this focus.

These innovations aim to provide greater resources for family support in the community, to increase the number of adoptions, and to allow unsubstantiated child abuse and neglect cases access to family preservation services (through the addition of a new category of "Families in Need of Service"). Families at risk of child abuse or neglect who are not eligible for services under current classifications would be targeted for services under this new category. Michigan has also initiated program changes that allow the state to terminate parental rights more quickly (under certain circumstances), increase the use of kinship care, and provide more explicit guidelines for making decisions regarding the processing of child welfare cases.

Approximately 100 prevention workers throughout the state provide supportive services to families in an attempt to avert the need to involve families formally in the Child Protective Service (CPS) system. Families referred to prevention workers often have been referred to CPS for an investigation, but evidence of abuse or neglect in these families has not been substantiated. Families may also request these services. Assistance provided by prevention workers ranges from "hard" services such as housing assistance to "soft" services such as counseling or parenting assistance. Families may voluntarily engage in these services for up to two years (a lifetime cap), although the average length of use is 6 to 12 months.

When abuse or neglect has been substantiated, Protective Services may refer the case to its family preservation program, Families First, rather than remove the child from the home. Michigan developed this statewide program and trains private agency staff who provide the service. Families First is based on the "Homebuilders Model" of service delivery, in which families receive four to six weeks of intensive in-home services to address environmental and parenting needs. Families First staff work with no more than two families at a time and are available to these families on a 24-hour, seven-day-a-week basis, providing a minimum of five hours per week of direct service and up to 20 hours or more per week as needed. Workers follow up with families at 3, 6, and 12 months after the intervention. In 1994, 7,566 children in 3,153 families participated in Families First, and in 84.5 percent of these cases, no out-of-home placements occurred within the 12 months after participation.35

Involvement of Local Communities

One of the objectives of Michigan’s child welfare program is to be a "part of the community fabric" by helping the community provide family preservation and family support services. Thus, most of the five-year grant of $35 million in federal funds (Title IV-B, Part 2) that Michigan receives to support families at risk for child abuse and neglect is passed through to county Multi-Purpose Human Service Collaboratives (staffed by county FIA directors or staff from private agencies), which purchase community-based services to prevent child abuse and neglect.

FIA also contracts out certain child welfare responsibilities to community agencies. Both current and previous administrations have encouraged this privatization. Michigan’s family preservation program, Families First, is contracted out 100 percent. In part, this arrangement exists because the service model requires 24-hour availability of staff. The unions would not agree to this condition, so FIA put out bids for the service. While Families First providers are private agencies, the program design, forms, and training come from the state. In-home supportive services, such as counseling for Prevention or Foster Care clients, are purchased through contracts as well. Approximately 64 percent of children in family foster care placement are managed by private agencies, but FIA staff monitor these cases.

Program Challenges

Over the last decade, the number of referrals to child welfare services has grown, while FIA staffing has not increased—with the exception of 125 recently hired protective service staff. As a result, much of the increase in demand for child welfare services has been met by private-sector providers. While state administrators support this arrangement, they believe it is important to maintain a service delivery system that includes both public- and private-sector providers.

The largest need for services currently exists in prevention. There is also an increasing need for foster parents. Meeting both needs is critical, because workers believe that the population they now serve—both children and their parents—requires a higher level of attention. Many parents entering the system now were raised in foster care themselves, and reportedly as many as 80 percent of the current foster care caseload also receive public assistance.

Emergency Services and Housing

Michigan operates a number of programs that are designed to address the needs of families experiencing emergencies. However, the funding currently available for these programs is substantially less than what was available during the early part of the 1990s.

From October 1991 to December 1991, nearly all emergency service activities were curtailed as a result of budget issues. When the governor’s budget was finally passed, shortly before the start of the new fiscal year, it included a provision to block grant emergency assistance funds to the counties. However, counties were not prepared to receive block grants and operate their own programs. For several months, only cases with life-threatening emergencies received assistance. In December 1991, administrative rules were created for the new State Emergency Relief (SER) program. The change from the emergency assistance program to the SER program was accompanied by a 69 percent reduction in emergency assistance expenditures by the state and a 72 percent reduction in the total number of persons (from 222,400 in FY 1991 to 62,327 in FY 1992) who received state-funded emergency assistance.36

SER program administrative rules restrict eligibility, place lower caps on services, and place more stringent measures on clients receiving assistance (for example, placing liens on homes when homeowners requested assistance for repairs). Other eligibility restrictions attempt, in effect, to distinguish "deserving" individuals and families from those "undeserving" of assistance. For example, SER funds may only be used to resolve an emergency situation and may not be used if that situation is likely to recur or in cases where the emergency is "client-caused." (An event is "client-caused" when the individual or group failed to use available money to prevent the emergency.) Good cause considers income shortfalls in meeting shelter, utility, or food obligations. In other words, the need must be based on the client’s inability to meet obligations, not on insufficient planning.

The Division of Energy, Housing, and Emergency Programs in the Family Independence Agency administers the SER program. In line with SER’s goal to "prevent serious harm to individuals and families,"37 SER funds programs for the homeless as well as programs offering other emergency assistance. The State Emergency Relief program is almost completely state-funded. In fact, state administrators see this as the largest funding and philosophical change in the area of emergency services. Federal Title IV-A Emergency Assistance funds were primarily used to fund Families First, rather than SER. (Beginning in October 1996, Title IV-A funds were replaced by TANF funds.) The State Emergency Relief program has five components, for a total funding level of $34.6 million in FY 1997:

  • State Emergency Relief is a state-administered program that "assists applicants with safe, decent, affordable housing and other essential needs when an emergency situation arises."38 SER allocations also include $6 million for burial assistance. SER funds remain in a central fund that local FIA offices can draw from; specific amounts are not determined per county.
  • Emergency Services funds of $7.0 million (FY 1997) are distributed throughout the state beginning with a minimum base per county of $5,500; the rest is determined by a formula that considers public assistance program caseloads in counties over the last 12 months. The state sets broad guidelines for use of these funds but leaves direct administration to local offices. ES funds are meant to address needs not covered by SER assistance. In general, the majority of these funds are directed toward emergency shelters and food assistance programs.
  • State Emergency Funds was initiated in 1995 and distributes $2 million annually to Community Action Agencies throughout the state. These funds are used in essentially the same manner as the ES funds.
  • The Salvation Army receives state funds in the amount of $9.4 million (which could go as high as $10 million in the current fiscal year) to support shelters, homeless prevention programs, and transitional housing. This component of the State Emergency Relief program was initiated in 1992 when the state’s General Assistance program was eliminated. Funding levels are based on a payment of $10 per night to cover the cost of a bed and two meals but not supportive services.
  • The Food Bank Council and two agencies serving persons of Arabic background (the state’s largest immigrant group) receive the final pot of funding from the Emergency Relief Program. These groups receive small allocations.

Service Delivery Structure

Emergency services are provided by both public and private agencies, but all emergency shelters are operated by nonprofit organizations. FIA offices cannot use funds for the direct provision of shelter, food services, or meals; these activities must be contracted out to other providers.

The SER program will assist only individuals and families who have some form of income (which can include public assistance) but less than $50 in available cash. Approximately 80 percent of those who gain access to SER services receive other public assistance.

County directors have been instructed to give first preference for Emergency Services funds to "persons in danger of losing their residence, and those already living in emergency shelters."39 Additionally, each county should at least maintain, but preferably increase, the funds targeted for emergency shelter or homeless services.

Housing Assistance

Throughout the state, the biggest challenge faced by emergency shelter providers is their limited ability to move people into available, affordable, and adequate housing. In Detroit, according to local officials, the housing market is generally inexpensive, with average monthly rents of $100 or less in public housing or $200 or less in private housing.40 On the other hand, these units are in very poor condition, leading to vacancy rates as high as 45 percent in Detroit’s public housing units. Even with low rents, the cost of private housing remains beyond many families. For example, Detroit’s public housing residents are families with household incomes that are 15 to 17 percent of the area median income, and the majority receive either AFDC/FIP or SSI. Without significant assistance, these families will not be able to leave public housing.

In general, public or subsidized housing is not a resource for homeless families in Michigan. When the federal government lifted the requirement giving homeless families priority status in receiving housing or Section 8 certificates, through a federal program providing rent assistance to low-income households, the state followed suit. However, this priority had never actually materialized in Detroit, because the city already had extremely long waiting lists. Part of the reason is attributed to insufficient Section 8 certificates. When the public housing authority announced the availability of 500 Section 8 certificates in the spring of 1996, more than 14,000 people requested applications, suggesting very high demand. Given limited access to public or subsidized housing for homeless families, many advocates and administrators of programs for the homeless feel frustrated that the only option for the homeless in Michigan is emergency shelter and these resources are limited.


Service Delivery Innovations and Challenges

Government reorganization and the "right sizing" of government have been as much a priority of the Engler administration as the specific policy changes that have been implemented during the governor’s tenure. As noted earlier, the philosophy that has guided Governor Engler’s reorganization of government is the creation of departments focused on accomplishing a single mission. While housing all programs with a similar focus under one administrative agency has many benefits, it also creates new challenges, especially around the coordination of program services. Although much reorganization has already taken place in Michigan, program administrators expect that the major effort to reduce the size of government through last year’s generous early retirement option will bring about even more dramatic changes in the delivery of services to low-income families.

Other statewide efforts are also under way to change how services are delivered to low-income families. From the perspective of individual low-income families, if successful, the creation of the Family Independence Specialist within the Family Independence Agency has the potential to dramatically alter the experience of low-income families who rely on FIP benefits for support. To involve communities in developing solutions to problems that often manifest themselves at the local level, Governor Engler has championed an initiative to involve faith-based communities in helping recipients make the transition from welfare to work.

Government Reorganization and the Coordination of Program Services

While the reorganization of government has had an impact on nearly every government agency in Michigan, the impact is particularly noticeable in the Family Independence Agency and its cash assistance program, FIP. The primary focus of FIP is now to move recipients from welfare to work. However, because all welfare-to-work programs are now under the auspices of the Michigan Jobs Commission, FIA has no official authority over the design and implementation of welfare-to-work programs. Consequently, coordination between FIA and MJC is critical. Similarly, although policy development and administrative responsibilities for Medicaid reside within the Department of Community Health, FIA staff are responsible for determining eligibility for Medicaid benefits.

Respondents from FIA and MJC had mixed feelings about how well the two entities work together. Staff acknowledged that the transition was difficult and that FIA and MJC do not always agree on program design issues. For example, an area of ongoing tension revolves around who is responsible for making sure that FIP recipients are job ready. MJC contends that its responsibility is to help FIP recipients find jobs and that it is not equipped to deal with recipients who are not job ready. FIA staff contend that the funds FIA would have used for this purpose have been transferred to MJC, making it impossible for FIA to address these issues. In spite of these difficulties, nearly all staff at both the state and local levels reported that collaboration has improved over time. This was especially true at the local level, where "turf" issues in some areas initially hampered working relationships.

The creation of DCH is more recent, so the relationship between FIA and DCH is still being worked out. Some officials in the state believe it is possible that in the future DCH will assume responsibility for determining Medicaid eligibility. While eligibility determination for FIA programs would become much easier, clients would have to go to two agencies to apply for benefits. Advocates are worried that the creation of DCH will reduce their ability to get legislators interested in the issues affecting FIA clients. Health issues have always received more attention because they account for such a large share of the budget. Now that health is in a totally separate agency, advocates worry that legislators will prefer to spend their time on issues affecting DCH rather than on issues affecting FIA.

Government Downsizing

Michigan’s policy and organizational changes are taking place against the backdrop of government downsizing. On November 7, 1996, the governor announced his intention to "right size" government through a generous early retirement option. Under the regular retirement option, the only state employees eligible to retire with full pension and health benefits are those age 60 with 10 years of service or those age 55 with 30 years of service. The early retirement option reduced the age criteria (to 50 with 25 years of service or 55 with 15 years of service) and increased the multiplier used to determine monthly retirement benefits. Once staff retire, agencies may only replace at a 25 percent rate (that is, one new staff person for every four who retire), but they will receive 75 percent of the savings gained from reducing the workforce. FIA, however, is allowed to replace one staff person for every two who retire. The last day retiring staff could work was May 31, 1997.

Although precise counts were not available at the time of the site visit, state officials expected 7 percent of the entire workforce to take the early retirement option, although FIA expected to lose a larger share of employees. In fact, more than 1,500 FIA employees opted for early retirement, a larger number than at any other department. All agencies will make decisions about how they will manage during the short run, and then they will develop long-term plans for operations and service delivery—including identifying functions that can be privatized. FIA staff expected that the agency’s central office operations would have to be streamlined considerably because it would have to use its new hires to replace direct service staff who retired. They also expect to examine all agency functions to determine which ones can be contracted out to private-sector agencies.

Nongovernmental organizations in Michigan already play a significant role in service provision, primarily in child welfare, employment and training, and emergency services. With the reduction in permanent state employees, these organizations are likely to play an even greater role. However, state officials do not expect they would ever move to a situation in which all services are privatized. There has been little movement toward involving for-profit companies in the delivery of services for low-income families in Michigan. Even in employment and training, where nearly all services are already privatized, only 10 percent of all providers are for-profit companies.

State agencies alone cannot make decisions regarding privatization of services or agency reorganizations. The state’s Department of Management and Budget has a role in this decision; it is up to this agency to determine the cost-effectiveness of privatizing a particular government function. The state’s Department of Civil Service must also approve all contracting proposals. In addition, the governor expects to have input into any decisions around agency reorganizations that occur as a result of the early retirement option.

Involvement of Communities

One of the four principles underlying To Strengthen Michigan Families was to involve communities in developing solutions to problems. As a part of Project Zero, local FIA offices were instructed to work in partnership with local service providers to determine how best to use the resources within the community to help families make the transition from welfare to work. Governor Engler also made an effort to involve faith-based organizations in welfare reform by contracting with the Salvation Army (which will then contract with local churches and synagogues) to provide mentoring services for welfare recipients making the transition from welfare to work. While staff were supportive of the concept of mentoring, they were concerned that relying on faith-based organizations to provide mentoring might not work for all recipients.

The Family Independence Specialist

On April 1, 1997, FIA shifted responsibility for all FIP cases to the Family Independence Specialist, a new, higher-skilled position that previously had been implemented only in the Project Zero sites. FIS workers must have a college degree or have worked as an AFDC/FIP eligibility worker for a minimum of six years. FIS workers have been referred to as "barrier busters" because one of their main responsibilities is to work with families to remove any barriers to employment.

FIS workers have all been trained in an approach to working with families known as strength-based, solution-focused counseling. FIS workers will handle all aspects of an AFDC/FIP recipient’s case, including eligibility determination, monitoring of participation in employment and training, and authorization of child care. The goal is to have each worker responsible for no more than 65 cases, a number far lower than workers carry in most other states. Home visits for all FIP recipients are expected.

Program administrators believe that, if successful, the FIS worker could dramatically alter the way low-income families receive and access services. They believe that this new approach to service delivery has the potential to provide a mechanism for identifying families at risk for child abuse and neglect earlier and for linking families who have particular needs, such as substance abuse counseling, to resources that they may not be able to access on their own.


Implications of the New Federal Welfare Reform Legislation

When the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was signed into law on August 22, 1996, Michigan had been reforming its welfare system for nearly four years and already had a plan in place to take advantage of the new flexibility the federal law provided. Consequently, the law has resulted in minor rather than major policy changes in the affected programs.

Temporary Assistance for Needy Families

State-level respondents overwhelmingly believed that federal welfare reform will have little impact, other than increasing flexibility, on how the state runs its cash assistance system. The one significant difference between federal requirements and Michigan’s approach to reform is that Michigan has never implemented a time limit on benefits. Currently, the state has no plan to change its policy to include a five-year lifetime limit on the receipt of FIP benefits. Given its emphasis on work and full family sanctions for noncompliance, some officials do not expect to have many families who will exceed the five-year lifetime limit for receiving cash assistance.

Administration officials say that the state will continue to provide assistance, with state funds, to those who hit the time limit but are complying with program requirements. However, no program has been created to provide this type of assistance, and service providers are concerned with what they perceive as a crumbling safety net. Already, local social service providers report seeing families who are confused about the reforms and assume they have lost eligibility for public assistance. These organizations see their roles as "gap-fillers," but they are fearful that they will be unable to address all needs if families actually lose government assistance.

State officials are not without their own concerns. Despite the fact that Michigan feels its government has a significant head start in reforming the state welfare system, state officials were skeptical about the state’s ability to meet the federal two-parent work participation rates. (In FY 1997, all states are required to have 75 percent of their two-parent cases participating in work activities for 35 hours per week. Those that do not meet this requirement face a penalty up to 5 percent of their TANF block grant.) Approximately 16,500 two-parent families received FIP benefits in early 1997. About 48 percent of two-parent cases are working, but only at 20 hours a week; only 5 to 13 percent are working at least 35 hours a week.

To address this issue, in January 1997 the governor authorized an extra $13 million for Michigan Works! Agencies to develop and pay for on-the-job-training (OJT) placements for these families. At the local level, program administrators voiced some misgivings about designating funds specifically for OJT because the rules and regulations associated with OJT were perceived to be cumbersome and administrative costs high—sometimes over and above the funds spent on clients’ wages.

Child Support

With the passage of new federal mandates to implement more centralized and streamlined processes and data systems, Michigan’s child support system is facing a number of difficult issues. The local structure of the child support system makes it difficult to centralize many child support functions, and the Friend of the Court structure makes it difficult to make the process more administrative than judicial. Some counties operate state-of-the-art child support automated systems that, because of financial constraints, could never be replicated statewide. These counties do not want to give up their local systems to participate in a streamlined, statewide system that is of lesser quality than the one they have in place.

Before the passage of PRWORA, the state failed to get legislative approval for a new-hire reporting system, largely because businesses would not support the collection of the additional information. However, the state expects it will be able to meet the new-hire reporting requirement by building on plans to collect information on new hires for a recently passed no-file state income tax. The new-hire reporting system was implemented in October 1997 under federal law, but it is not attached to the state’s "No Form, No File" income tax option. Instead, employers are reporting on a voluntary basis to a private contractor.

The reports are sent to the federal government, where they are matched against child support case record files used to assist in interstate enforcement. Internal state matches with FOC case records are expected to occur sometime in mid-1998. The state hopes that this procedure will enable timely establishment of child support wage assignments.

Immigrant Provisions

Michigan has a very small immigrant population. Thus, unlike other large states where the PRWORA immigrant provisions have far-reaching consequences, state officials did not expect to see much of an impact as a result of new federal provisions that would have eliminated SSI benefits for noncitizen legal immigrants. Before the passage of PRWORA, all legal permanent residents who met the eligibility criteria were eligible for State Disability Assistance. Thus, all immigrants who would have lost SSI would have been eligible for SDA. On October 1, 1996, Michigan implemented its first changes to immigrants’ eligibility for SDA, making only immigrants who are defined as "qualified aliens" under PRWORA eligible for SDA. Effective November 1, 1997, the only immigrants eligible for SDA are immigrants who are eligible for SSI and refugees and people given asylum who have been in the United States for more than seven years. This change was made to ensure that the SDA program did not incur all of the costs of replacing benefits lost to immigrants no longer eligible for SSI. Now that the Balanced Budget Act has restored SSI benefits for legal immigrants in residence in the United States as of August 22, 1996, this provision will affect only legal immigrants who enter the country after that date.

Michigan has opted to provide TANF to legal, qualified immigrants who were already in the United States before August 22, 1996. The state does not plan to provide benefits to immigrants who enter the United States after this date for the five years during which they are barred from receiving federal benefits, but it will provide TANF benefits to them following the five-year bar. In areas of the state with immigrant concentrations, these changes are expected to have a great impact on local service providers. While nonprofit groups rarely saw many immigrants present themselves for services in the past, they expect this to change as immigrants’ eligibility for government support changes.

Food Stamp Employment and Training

New federal rules applying to able-bodied adults without children who receive food stamps may have a significant effect on Michigan residents. Although Michigan has invested substantial state resources in employment and training programs for AFDC/FIP recipients, historically the state has operated only a very small employment and training program for Food Stamp recipients. Thus, the state has neither an infrastructure nor funds in place to provide employment services to able-bodied, childless Food Stamp recipients who are now required to work after receiving food stamps for three months. Michigan also did not apply for exemption from these requirements in areas with high unemployment and labor shortages, as allowed under federal law. Governor Engler felt that it was unfair to ask single mothers with children to work and not to expect the same from single, able-bodied adults. There was also a concern that it would be inconsistent to try to sell Michigan as a good place to locate a business while claiming an excess supply of unskilled workers.

To meet the Food Stamp work requirement, able-bodied childless recipients are required to work for 20 hours per week, participate in a work program for 20 hours per week, or volunteer for 25 hours per month with a nonprofit organization. The community service option was requested by Governor Engler and received approval from the federal government. It is the responsibility of Food Stamp recipients to identify sites and secure agreements with the sites to allow them to perform community service work. Recipients who select this option are required to have a Community Service Activity report signed each month by the nonprofit organization verifying the number of volunteer hours. However, non-profit groups in Detroit say their organizations together could place only 200 to 300 recipients, and therefore cannot provide a solution for the thousands of recipients who could be affected by the work requirements.

The Windfall

Since Michigan’s AFDC/FIP caseload has been declining in recent years, for FY 1998 Michigan expects to receive a "windfall"—that is, federal TANF block grant funds in excess of costs—of more than $200 million. Michigan plans to use this additional revenue to fund a number of program enhancements for low-income families, as well as to offset general-fund costs and to protect the state against future economic downturns. Specific plans for the windfall (or state FIP savings) include

  • Maintaining the monthly $50 child support "pass-through" for FIP recipients ($8.6 million of FIP funds)
  • Expanding the Work First program ($20 million)
  • Adding the children whose SSI eligibility has been terminated by the federal government to FIP ($5.2 million)
  • Simplifying FIP eligibility ($6.0 million)
  • Augmenting day care funding ($16.7 million)
  • Expanding Project Zero to six additional sites ($3.0 million)
  • Implementing child welfare changes recommended by the Children’s Commission ($12 million)
  • Offsetting general-fund costs ($80 million)
  • Setting aside funds for future costs ($85 million)

In general, program administrators felt that Michigan was in an enviable position in comparison with many other states, particularly other large states. Especially in the area of income support for families with children, Michigan had a set of concrete plans in place when PRWORA passed, which the state quickly moved to implement. The one aspect of the law that staff viewed as burdensome was the required Food Stamp changes. Ideally, the state would have liked to receive block grants for all of the federal and state programs for low-income families. State administrators believe that the federal government has a monitoring role to play but that the design of programs should be left to state and local officials.


Conclusion

In recent years, Michigan has clearly been a leader in developing and implementing reforms for low-income families. Michigan is one of the few large states that had already implemented a major welfare reform initiative emphasizing work before the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Therefore, Michigan was fully prepared to take advantage of the additional opportunities for state flexibility that PRWORA provided as soon as it was signed into law. Similarly, Michigan already had an infrastructure in place that allowed the state to immediately create a unified child care system where all low-income families, regardless of whether they are working or receiving assistance from the Family Independence Program (FIP), apply for and receive child care in exactly the same manner.

Although Michigan has made major changes in policies and programs affecting low-income families, some of the mechanics for carrying out the most recent reforms are not yet completely in place. For example, the transition of Family Independence Agency staff to the Family Independence Specialist position is expected to take some time. Additionally, advocates and nonprofit leaders are concerned about the current and future impact of these reforms. Nonprofit groups lack the capacity to provide services to all families working in low-wage jobs or cut off from assistance and to individuals cut from Food Stamp and Supplemental Security Income rolls.

Program administrators, though, expect that the governor will turn his attention to other areas where major reforms have not yet taken hold. In the coming years, Michigan’s child welfare system is likely to undergo far more scrutiny than it has in the past. Resources saved from declining FIP caseloads will provide some of the additional resources needed to make improvements to the system. However, because families in the child welfare system often face problems that are extremely difficult to solve, success may take far longer to achieve. Additionally, unlike welfare reform, where there was a consensus among state officials that the system needed to focus more on work, there is less clarity in what a reformed child welfare system should look like. In particular, Michigan is likely to face a contentious debate over whether the state has placed too much emphasis on family preservation.

The reforms Michigan proposed or implemented over the last five years have consistently focused on the four key principles outlined in To Strengthen Michigan Families —encourage employment, target support, increase responsibility, and involve communities. Thus, it is likely that future reforms will follow these same principles. However, state officials acknowledge that the strength of Michigan’s economy has contributed greatly to the success of To Strengthen Michigan Families , and it is possible that these principles may be implemented in a very different manner in a less favorable economic environment.


Notes

1. Kids Count Data Book: State Profiles of Child Well-Being , The Annie E. Casey Foundation, Baltimore, MD, 1998. The 10 selected measures are percent of low birth-weight babies; infant mortality rate; child death rate; rate of teen deaths by accident, homicide, and suicide; teen birthrate; juvenile violent-crime arrest rate; percent of teens who are high school dropouts; percent of teens not attending school and not working; percent of children in poverty; and percent of families with children headed by a single parent.

2. Department of Management and Budget web site (http://www.state.mi.us/dmb/dir).

3. Governor Engler’s Fiscal 1997 Budget Recommendation: A Budget for Michigan’s Taxpayers (http://www.state.mi.us/dmb/dir/mff.htm).

4. Governor’s Coordination and Special Services Plan, Program Years 1996 and 1997 , State of Michigan, Michigan Jobs Commission.

5. "To Strengthen Michigan Families, 1992–1994–1996 Block Grant Reform," Michigan Family Independence Agency.

6. Michigan Financial Focus: A Letter to the Citizens of Michigan from the Governor , Michigan Department of Management and Budget Home Page, October 20, 1997 (http://www.state.mi. us/dmb/ofm/reports/mff.htm#letter).

7. Families are eligible for SFA (State FIP) if they meet one or more of the following criteria: the family includes (1) a dependent child who is not eligible for FIP because the child does not live with a specified relative; (2) a pregnant woman and her husband when the unborn child does not meet FIP eligibility factors; (3) a pregnant woman’s husband when the unborn meets FIP eligibility factors and the woman receives FIP and the husband is not eligible for FIP because he has no other FIP-eligible child in the home; (4) a parent whose child is temporarily in foster care, provided there is a plan for returning the child to the parent’s home, and the parent is cooperating with the plan; (5) a foster parent(s) who is currently caring for a foster child; and/or (6) a person who is age 17, not living with an adult caretaker, and is a full-time high-school student.

To be eligible for SDA, a person must be disabled according to one or more of the following criteria: (1) the person is unable to work due to physical or mental disability for at least 90 days from the onset of the disability; (2) the person is a caretaker of a disabled person provided that the assistance of a caretaker is determined medically necessary and the caretaker and the disabled person live together; (3) the person is a resident of an adult foster care home, a home for the aged, a substance abuse treatment center, or a county infirmary; or (4) the person is receiving postresidential substance abuse treatment within 30 days following discharge from a substance abuse treatment center.

8. Sheila Zedlewski and Linda Giannarelli, Diversity among State Welfare Programs: Implications for Reform , New Federalism: Issues and Options for States, Series A, No. A-1, The Urban Institute, Washington, DC, January 1997.

9. Margaret B. Hargreaves et al., The Evaluation of To Strengthen Michigan Families: Process Report , Abt Associates Inc., Cambridge, MA, February 1995.

10. Alan Werner and Robert Kornfeld, Final Impact Report: The Evaluation of To Strengthen Michigan Families , Abt Associates Inc., Cambridge, MA, 1997.

11. Data reported in Work First monthly report, compiled by the Michigan Jobs Commission, March 19, 1997.

12. To Strengthen Michigan Families: Welfare Reform Data, Monitoring Data through August and September 1997 , Policy Analysis and Program Evaluation Division, Administration for Budget, Analysis, and Financial Management. Michigan Family Independence Agency, Lansing, MI, October 1997.

13. Laura Colville et al., A Study of AFDC Case Closures Due to JOBS Sanctions: April 1996 Case Closures , Michigan Family Independence Agency, Administration for Legislation, Budget, and Analysis, Lansing, MI, May 1997.

14. Kristin Seefeldt et al., Project Zero: The View from the Sites , University of Michigan, Schools of Social Work, Law, and Public Policy, Ann Arbor, MI, May 1997.

15. In 1995, Ottawa County had the lowest unemployment rate and the lowest poverty rate of the six sites. For more information, see Kristin Seefeldt et al., Project Zero: The View from the Sites.

16. To Strengthen Michigan Families, 1992 , Michigan Family Independence Agency.

17. Funding for JTPA is for the program year beginning July 1, 1996, and ending June 30, 1997. Funding for Work First is for FY 1997. Data provided by the City of Detroit Employment and Training Department.

18. Governor’s Coordination and Special Services Plan for Program Years 1996 and 1997 , Michigan Jobs Commission.

19. List culled from Governor’s Coordination and Special Services Plan for Program Years 1996 and 1997.

20. "To Strengthen Michigan Families, 1992–1994–1996 Block Grant Reform," Michigan Family Independence Agency.

21. Child Care and Development Plan for the Michigan Family Independence Agency for the period October 1, 1997, to September 30, 1999.

22. Descriptive program documents from the Michigan Family Independence Agency.

23. "Unified Child Care Caseload Projections by Program Component FY 1989–FY 1998," Family Independence Agency, June 10, 1996.

24. Child Care: Making It Work , Governor’s Advisory Committee on Day Care for Children, February 1996.

25. Descriptive program documents from the Michigan Family Independence Agency.

26. "Unified Child Care Caseload by Program Component, Average Monthly Cases FY 1988–FY 1996," Michigan Family Independence Agency, June 10, 1996 (transitional child care—5,135; migrant—558; low-income—16,954 out of a total of 28,230 cases).

27. Rough estimates based on numbers from previous note and the FIA projection that 12,500 working FIP clients were affected by conversion.

28. "Welfare Reform Adds to Day-Care Crunch." Ann Arbor News Bureau, November 1, 1996.

29. To Strengthen Michigan Families: Welfare Reform Data, Monitoring Data through August and September 1997 , Policy Analysis and Program Evaluation Division, Administration for Budget, Analysis, and Financial Management. Michigan Family Independence Agency, Lansing, MI, October 1997.

30. For more information on Medicaid and other health services in Michigan, see the Urban Institute report Health Policy for Low-Income People in Michigan.

31. To Strengthen Michigan Families: Welfare Reform Data, Monitoring Data through August and September 1997 , Policy Analysis and Program Evaluation Division, Administration for Budget, Analysis, and Financial Management. Michigan Family Independence Agency, Lansing, MI, October 1997.

32. Child Welfare League of America, Child Abuse and Neglect: A Look at the States , Table 2.1, Washington, DC, 1995.

33. Data provided by FIA and in Robert George et al., Core Dataset Project: Child Welfare Service Histories , Final Report to the Office of the Assistant Secretary for Planning and Evaluation, Grant Number HHS 100-93-0024, 1996.

34. Monthly Trend Report of Key FIA Statistics , Family Independence Agency, Data Reporting Unit, Lansing, MI, July 1997.

35. Data monitoring and testimony.

36. "The Impact on Individuals and Communities of the Reductions in Social Services in Michigan in 1991–1992," Michigan League for Human Services, May 10, 1993.

37. State Emergency Relief Manual , Michigan Department of Social Services (now FIA), October 1994.

38. State Emergency Relief Manual.

39. Emergency Services Funds for FY 1997, Memorandum from the Family Services Administration to county directors, August 9, 1996.

40. Information from interviews; no documentation.


APPENDIX
List of Interview Sources

State-Level Respondent Agencies/Organizations

Legislature

Office of the Governor

Michigan Department of Management and Budget, Office of Health and Human Services

Michigan Family Independence Agency, Central Office staff responsible for: Income Support, Child Welfare, Refugee Resettlement, Child Care, Food Stamps, Work First, Child Support, Administration (Budget and Research)

Michigan Jobs Commission: Office of Workforce Development

Michigan Employment Security Agency

Michigan Department of Education, Health, and Early Childhood Education

Michigan Head Start Association

Michigan Department of Community Health—Teen Pregnancy

Michigan Homeless Coalition

Michigan League for Human Services

Michigan County Social Services Association

Michigan State Housing Development Authority

 

Local Respondent Agencies/Organizations: Detroit

Office of the Mayor

Detroit City Council

Detroit Department of Human Services

Wayne County Family Independence Agency

    Executive staff (Income Support and Child Welfare)

    Local office managers and line staff

City of Detroit Employment and Training Department

Child Care Coordinating Council

Operation Get Down

Coalition on Temporary Shelter

Latino Family Services

Women's Justice Center

Detroit Rescue Mission

United Way Community Services

Jewish Federation of Metropolitan Detroit

Jewish Vocational Services

Family and Neighborhood Services

Hunger Action Coalition of Michigan

Black Family Development

Detroit Urban League

Detroit Housing Department

Lula Bell Stewart Center


Tables

Table 1. Michigan State Characteristics, 1995

   Michigan United States

Population Characteristics              
  Population (1995)a (in thousands) 9,555          260,202       
  Percent under Age 18 (1995)a 27.6%    26.8%   
  Percent Hispanic (1995)a 1.7%    10.7%   
  Percent Non-Hispanic Black (1995)a 13.7%    12.5%   
  Percent Noncitizen Immigrant (1996)a 2.3%    6.4%   
  Percent Rural (1990)b 37.5%    36.4%   
  Growth: 1990–1995c 2.7%    5.6%   
  Births per 1,000 Women Ages 15–44 (1994)d 63.1    66.7   
  Percent to Unmarried Women (1994)d 35.0%    32.6%   
  Percent to Women under Age 20 That Were Nonmarital (1994)d 87%    76%   
  Per 1,000 Women Ages 15–19 (1994)d 52    59   
              
Economic Characteristics              
  Per Capita Income (1995)e $23,915    $23,208   
  Percent Change in Per Capita Personal Income (1990–1995)e, f 27.8%    21.2%   
  Percent below Poverty (1994)g 13.9%    14.3%   
  Unemployment Rate (1996)h 4.9%    5.4%   
  Employment Rate (1996)h, i 63.1%    63.2%   
  Percent Jobs in Manufacturing (1995)j 24.3%    16.0%   
  Percent Jobs in Service Sector (1995)j 22.1%    23.1%   
  Percent Jobs in Public Sector (1995)j 12.6%    14.7%   
              
   Michigan United States

Family Profile              
  Percent Two-Parent Families (1994)g, k 35.0%    35.7%   
  Percent One-Parent Families (1994)g, l 15.1%    13.8%   
  Percent Mothers with Child 12 or under 35.1%    38.1%   
    Working Full Time (1994)g 17.8%    16.1%   
    Working Part Time (1994)g 39.3%    40.3%   
    In Two-Parent Families and Working (1994)g 13.5%    13.9%   
    In One-Parent Families and Working (1994)g 22.0%    21.7%   
  Percent Children below Poverty (1994)g $40,315    $37,109   
  Median Income of Families with Children (1994)g 5.8%    10.0%   
  Percent Children Uninsured (1994)a            
              
Political              
  Governor's Affiliation (1996)m Republican         
  Party Control of Senate (1996)m 16D-22R         
  Party Control of House (1996)m 58D-52R         

a. Two-year concatenated March Current Population Survey (CPS) files, 1995 and 1996. These files are edited by the Urban Institute's TRIM2 microsimulation model. Excludes those in families with active military members.
b. U.S. Bureau of the Census. 1990 Census of Population: General Population Characteristics. Washington, D.C., 1992.
c. U.S. Bureau of the Census. Statistical Abstract of the United States: 1996 (116th edition). Washington, D.C., 1996. 1995 popu-lation as of July 1. 1990 population as of April 1.
d. National Center for Health Statistics. Monthly Vital Statistics Report, Vol. 44, Nos. 3 and 11.
e. State Personal Income, 1969–1995. CD-ROM. Washington, D.C.: Regional Economic Measurement Division (BE-55), Bureau of Economic Analysis, Economics, and Statistics Administration, Department of Commerce, June 1996.
f. Computed using mid-year population estimates of the Bureau of the Census.
g. CPS three-year average (March 1994–March 1996, where 1994 is the center year) edited using the Urban Institute's TRIM2 microsimulation model.
h. U.S. Department of Labor, State and Regional Unemployment, 1996 Annual Averages. USDL 97-88. Washington, D.C., March 18, 1997.
i. Employment rate is calculated using the civilian noninstitutionalized population 16 years of age and over.
j. Bureau of Labor Statistics. 1995 Geographic Profile of Employment and Unemployment.
k. Percent of all families (two or more related persons living in the same household) that include one or more related children and in which the head of the family is nonelderly and married and the spouse is present.
l. Percent of all families (two or more related persons living in the same household) that include one or more related children and in which the head of the family is not married and nonelderly.
m. National Conference of State Legislatures. 1997 Partisan Composition, May 7 Update. D indicates Democrat and R indicates Republican.


Table 2. Organizational Structure of Social Welfare Programs

Program State Agency Location Local Administrative Arrangement

Income Security        
AFDC/FIP FIA, Family Independence Services Administration County/District FIA
Food Stamps FIA, Family Independence Services Administration County/District FIA
 
Education and Training        
JOBS (Work First) MJC, Workforce Development Local Michigan Works! Agencies
JOBS (MOST) FIA, Family Independence Services Administration County/District FIA
JTPA MJC, Workforce Development Local Michigan Works! Agencies
Employment Services MJC, Michigan Employment Security Agency (MESA) Local MESA offices
 
Child Care/Child Development        
Child Care FIA, Family Independence Services Administration County/District FIA
Head Start Local grantees
Other Child Development DOE, Health and Early Childhood Education Local schools
Program State Agency Location Local Administrative Arrangement

Child Support Enforcement   FIA, Office of Child Support County/District FIA
      Friend of the Court
      County Prosecuting Attorneys
 
Child Welfare        
Child Protection/Family Preservation FIA, Office of Children's Services County/District FIA and contracted agencies (Family Preservation services fully contracted)
Foster Care FIA, Office of Children's Services County/District FIA and contracted agencies
Adoption Assistance FIA, Office of Children's Services County/District FIA and contracted agencies
 
Emergency Services        
State Emergency Assistance FIA, Division of Energy, Housing, and Emergency Programs County/District FIA and contracted agencies
Homeless Programs FIA, Division of Energy, Housing, and Emergency Programs Local shelters (through contracts with either Salvation Army or County/District FIA offices)
 
Refugees   FIA, Office of Refugee Resettlement Local contractors
 
Health        
Medicaid DCH, FIA County/District FIA

Table 3. Social Welfare Spending for Families with Children in Michigan: Selected Federal-State Matching Programs, Fiscal Year 1995a

   Federal State/Local Total Spending per Person in Poor Familiesb


Program   ($ in millions) Michigan United States

Income Security  
    AFDC Benefitsc $568.3      $431.5      $999.8      $1,064      $851     
    AFDC Administrationd 83.1    83.1    166.2    177    136   
    SSI for Childrene       194.3    207    184   
    EITC Federalf, g 691.6       691.6    736    1,010   
                                
Food Security                                
    Food Stamps, households
      with childrenh
627.8       627.8    668    711   
    Child Nutritioni 251.5       251.5    268    344   
                                
Education and Training                                
    MOST/Work Firstj 50.3    32.1    82.5    88    59   
    JTPAk 73.2       73.2    78    73   
                                
Child Care/Development                                
    AFDCl 21.2    16.2    37.4    40    61   
    At-Riskm 10.9    8.3    19.1    20    20   
    CCDBGn 26.9       26.9    29    34   
    Head Startn 133.0       133.0    142    117   
                                
   Federal State/Local Total Spending per Person in Poor Familiesb


Program   ($ in millions) Michigan United States

Child Support Enforcemento   82.0    37.4    119.3    127    115   
                                
Child Welfare                                
    Protection/Family
      Preservationp
16.2    5.4    21.6    23    22   
    Foster Careq 111.7    97.6    209.3    223    222   
    Adoption Assistancer 31.9    24.3    56.2    60    29   
    Others 4.2       4.2    4    3   
                                
IV-A Emergency Assistancet   11.3    11.3    22.7    24    124   
                                
Health                                
    Medicaid, Children Onlyu 558.9    424.4    983.3    1,046    984   
                                
Total   3,354.0    1,171.6    4,719.9    5,023    5,097   

a. FY 1995 unless otherwise indicated in footnotes.

b. This is spending on each item divided by the number of poor persons in families with children. The number of poor was estimated using the average poverty rate for persons in families with children for 1993–95 (derived from three years of the Current Population Survey).

c. Source: ACF-231 Line by Line Report, Administration for Children and Families, U.S. Department of Health and Human Services.

d. This includes administrative costs for child care (except At-Risk), work programs, automated data processing (ADP), FAMIS (a management information system), fraud control, Systematic Alien Verification for Entitlements (SAVE), and other state and local expenses. Source: ACF-231 Line by Line Report, Administration for Children and Families, U.S. Department of Health and Human Services.

e. Spending is for the calendar year, estimated based on spending in June and December of each year. It includes federal spending and also state supplements for states in which the state supplement is federally administered. Source: Urban Institute estimates derived from data published in Children Receiving SSI (June 1993, December 1993, June 1995, December 1995), Office of Research, Evaluation, and Statistics, Social Security Administration.

f. EITC (Earned Income Tax Credit) Federal. Source: Statistics of Income Bulletin (Spring 1997 and Spring 1995), Internal Revenue Service.

g. Michigan does not have an EITC.

h. This includes benefit payments only, not administrative costs. Estimates are derived by multiplying actual benefit spending in each state by the estimated proportion of spending for households with children in each state. Source: Urban Institute tabulations based on Food Stamp Quality Control data and tabulations by Food and Consumer Service, U.S. Department of Agriculture.

i. This includes federal spending for WIC, school lunches, and school breakfasts, plus federal obligations for the Child and Adult Care Food Program and the Summer Food Service for Children. (Federal obligations may differ from actual spending.) Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

j. Total spending (combined federal and state) is average monthly expenditures multiplied by 12. The federal and state shares for 1995 were estimated based on the match rates for various components of JOBS spending for federal obligations in the fiscal year. Source: Urban Institute tabulations based on forms FSA-331 and ACF-332, Administration for Children and Families, U.S. Department of Health and Human Services.

k. This includes federal obligations to states for JTPA spending under Title II-A (disadvantaged adults), Title II-B (summer youth), and Title II-C (youth training). Federal obligations to states may differ from actual spending. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

l. This includes both regular AFDC and transitional child care. Administrative costs are included with AFDC administration. Source: ACF-231 Line by Line Report, Administration for Children and Families, U.S. Department of Health and Human Services.

m. Source: ACF-231 Line by Line Report, Administration for Children and Families, U.S. Department of Health and Human Services.

n. CCDBG (Child Care Development Block Grant) and Head Start data are federal obligations, which may differ from actual spend-ing. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

o. Source: Form OCSE-31, Office of Child Support Enforcement, U.S. Department of Health and Human Services.

p. This is federal spending and the state match for Title IV-B Part 1 (child welfare services) and Part 2 (family preservation and support). State spending is estimated based on a 25 percent match rate. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

q. This is federal spending and the state match for Title IV-E foster care assistance payments, placement services and administra-tive costs, training expenses, State Automated Child Welfare Information System, and Foster Care Independent Living. State spending is estimated based on the state match rates for each of these spending items. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

r. This is federal spending and the state match for Title IV-A adoption assistance payments. State spending is estimated based on the Medicaid match rate. The following are not included: nonrecurring adoption expenses. training services, and placement ser-vices and administrative costs. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

s. This is funds for Title IV-E Independent Living, which is all federal funding. Source: Budget Information for the States, Budget of the United States Government, Fiscal Year 1997 and Fiscal Year 1995, Office of Management and Budget.

t. Source: ACF-231 Line by Line Report, Administration for Children and Families, U.S. Department of Health and Human Services.

u. Expenditure data are for benefits only and do not include disproportionate share hospital payments, administrative costs, accounting adjustments, or the U.S. territories. Source: Urban Institute calculations based on data reported on forms HCFA-64 and HCFA-2082, Health Care Financing Administration, U.S. Department of Health and Human Services.


Table 4. Income Support Programs, Fiscal Year 1996

Average Monthly Caseloads Recipients Average Payment per Person
Program

Family Independence Program 177,648      526,079      $141     
 
State Assistance 10,947 12,664 202
    State Family Assistance 2,083 3,800 135
    State Disability Assistance 8,864 8,864 231
 
Food Stamps 386,049 895,834 72
    FIP 170,040 535,240 73
    Non-FIP 216,009 360,593 71
 
SSI Total 209,543 209,543 356
    Federal 204,335 204,335 341
    State Supplement 209,514 209,514 23

Source: Monthly Trend Report of Key FIA Statistics, February 1997, Data Reporting Unit of the Family Independence Agency.


About the Authors

Kristin S. Seefeldt is a research associate at the University of Michigan’s Program on Poverty and Social Welfare Policy. Her research interests are welfare and employment and training policy, and she has coauthored many reports on these topics. These include two that focus on Michigan’s welfare reforms: Project Zero: The View from the Sites and Moving toward a Vision of Family Independence: Local Managers’ Views of Michigan’s Welfare Reforms (both with Jodi Sandfort and Sandra Danziger). In addition, she is a coauthor (with Donald Duquette, Sandra Danziger, and Joan Abbey) of "We Know Better Than We Do: A Policy Framework for Child Welfare Reform," which was published in the most recent volume of the University of Michigan Journal of Law Reform.

LaDonna Pavetti is a senior researcher at Mathematica Policy Research, Inc. She worked as a senior research associate in the Human Resources Policy Center at the Urban Institute from 1993 to 1997. She is a noted expert and the author of numerous reports on welfare reform. Her most recent work includes a series of three reports on potential employment outcomes for welfare recipients: How Much More Can They Work? Setting Realistic Work Expectations for Welfare Recipients ; Against the Odds: Steady Employment among Low-Skilled Women ; and Moving Up, Moving Out or Going Nowhere? A Study of the Employment Patterns of Young Women and the Implications for Welfare Mothers (with Greg Acs).

Karen Maguire is a student in the masters in public policy program at the Kennedy School of Government and a research assistant for Professor David Ellwood. She worked as a research assistant at the Urban Institute from 1995 to 1997. While at the Institute she worked on numerous projects related to immigration and child welfare policy. She is coauthor (with Rebecca L. Clark and Allen W. Harden) of the report Informal Kinship Care.

Gretchen Kirby is a senior research analyst with Child Trends, Inc., whose work focuses on the methods of collection, use, and reporting of social indicators of family and child well-being at the federal, state, and local levels. Her most recent report, Social Indicators of Child and Family Well-Being: A Profile of Six State Systems (with Brett Brown and Christopher Botsko), was recently published as part of the Institute for Research on Poverty’s Special Report Series.



Topics/Tags: | Employment | Governing | Poverty, Assets and Safety Net


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